World’s top two shipbuilders in deal to merge: Seoul

The world’s biggest shipbuilder, South Korea’s Hyundai Heavy Industries, has reached a deal to acquire a majority stake in ailing number two Daewoo from the government, Seoul said yesterday .

The world’s top three shipbuilders are South Korean—Samsung Heavy ranks third—but the industry has been hammered in recent years by overcapacity and plunging ship prices.

Daewoo Shipbuilding & Marine Engineering has struggled in particular and has repeatedly been bailed out by the government to avoid collapse, at a total cost of several billion dollars.

Hyundai Heavy itself announced net losses of 633 billion won ($569 million) for 2018 on Thursday, blaming higher steel costs and lower demand.

But the state-funded Korea Development Bank (KDB), which owns 55.7 percent of Daewoo, said Hyundai had agreed to take over its stake.

Rather than paying cash, the shipbuilder will split itself in two and issue KDB shares in a new holding company that will own Daewoo and most of Hyundai Heavy’s existing businesses.

The deal would further consolidate Hyundai Heavy’s position as the world’s largest shipbuilder, giving it more than 20 percent of the global market.

Worlds top two shipbuilders in deal to merge: Seoul

The worlds biggest shipbuilder, South Koreas Hyundai Heavy Industries, has reached a deal to acquire a majority stake in ailing number two Daewoo from the government, Seoul said yesterday . The worlds top three shipbuilders are South KoreanSamsung Heavy ranks thirdbut the industry has been hammered in recent years by overcapacity and plunging ship prices. Daewoo Shipbuilding Marine Engineering has struggled in particular and has repeatedly been bailed out by the government to avoid collapse, at a total cost of several billion dollars. Hyundai Heavy itself announced net losses of 633 billion won ($569 million) for 2018 on Thursday, blaming higher steel costs and lower demand. But the state-funded Korea Development Bank (KDB), which owns 55.7 percent of Daewoo, said Hyundai had agreed to take over its stake. Rather than paying cash, the shipbuilder will split itself in two and issue KDB shares in a new holding company that will own Daewoo and most of Hyundai Heavys existing businesses. The deal would further consolidate Hyundai Heavys position as the worlds largest shipbuilder, giving it more than 20 percent of the global market.