South Korea's Hanwha Group will acquire ship engine maker HSD Engine in a move to shore up its shipbuilding unit following the conglomerate's takeover late last year of Daewoo Shipbuilding & Marine Engineering Co. (DSME).
Hanwha Impact, a subsidiary of Hanwha Energy, on Thursday signed a memorandum of understanding to acquire a 33% stake in HSD Engine for 226.9 billion won ($175.9 million) comprising 19% held by major shareholders and 14% in new stock after a capital increase through new share issuance. After due diligence, the main contract will be concluded in April and the acquisition will be completed in the third quarter after review of the merger's approval.
HSD Engine makes ship engines and possesses has the technology and manufacturing capacity to produce eco-friendly equipment and power generation facilities. Following its acquisition of DSME, Hanwha Group after taking over HSD Engine can offer a "one-stop ship manufacturing solution" from shipbuilding to engine manufacturing with its own production and technology know-how.
"By merging with DSME, we can strengthen our high value-added businesses such as the manufacturing of vessels with eco-friendly engines," a Hanwha Group source said. "The plan is to keep investing to secure future growth engines and core capacities."