South Korea’s No. 1 shipbuilder Hyundai Heavy Industries (HHI) is questioning the European Commission’s veto of its bid to acquire compatriot rival Daewoo Shipbuilding & Marine Engineering (DSME), even though it has stated it is no longer keen on the takeover.
On 23 March, HHI filed its legal challenge in the EC’s General Court.
In January, the EC’s antitrust regulators nixed HHI’s application to acquire DSME, saying the takeover would reduce competition in ship building, especially with regard to LNG carriers.
The European Commission was the only regulator which disapproved of the takeover, according to HHI, which said that ship owners are the ones who place orders. HHI added that market share does not hinder competition.
Since 2017, DSME has been under the control of its main creditor, state policy lender Korea Development Bank (KDB), which also happens to be HMM’s controlling stakeholder.
KDB has a tradition of rescuing troubled debtors by swapping debt for equity, but will divest their shares once the companies recover.
HHI, based in Ulsan, has stated that it wants to pursue other business opportunities with the rebound in newbuilding orders and has reopened its secondary yard in Gunsan. Therefore, HHI will not make another bid for DSME, regardless of the outcome of its legal challenge. The Gunsan facility was mothballed when newbuilding orders plunged due to the collapse in oil prices and weak shipping market in 2016.
South Korean president-elect Yoon Suk-yeol, due to take office in May, had stated during his campaign that he will prioritise the search for a new white knight for DSME.
Martina Li
Asia Correspondent
