Korea clears way for Hanwha's $1.45 bn takeover of DSME
Hyung-Kyu Kim
Apr 27, 2023 (Gmt+09:00)
Daewoo Shipbuilding & Marine Engineering's dockyard in Geoje, South Korea South Korea’s Fair Trade Commission (FTC) on Thursday gave its nod for Hanwha Group’s 2-trillion-won ($1.45 billion) takeover of Daewoo Shipbuilding & Marine Engineering Co. (DSME) on conditions of resolving anti-competition concerns.
The conditional approval cleared the way for the deal after the European Union, Japan, China and many other countries have given their thumbs up to the merger.
The FTC had looked into whether their combination would restrict competition in the defense sector in relation to component supply.
DSME builds naval ships and merchant vessels. Hanwha Group is a leading manufacturer of weapons and warship components such as radars and navigation systems.
The conditions attached for their combination include banning Hanwha from selling naval ship components to DSME at prices lower than those of competitors.
The defense-to-chemical conglomerate is also required not to refuse the country’s defense agency’s request for technology information on naval ship equipment for unreasonable reasons.
Hanwha also must take another corrective measure of not sharing business secrets obtained from DSME’s competitors with its affiliates.
The business group needs to comply with such measures at least for three years and update the FTC on their implementation.
The South Korean Navy's second 3,000-ton-class submarine built by DSME Those corrective measures will apply to some types of military components, which Hanwha sells directly to shipbuilders as the exclusive, or No. 1 supplier.
Five Hanwha Group units, including Hanwha Aerospace Co. and Hanwha Systems Co., will split ownership of the 49.3% stake in DSME.
Under the Hanwha Group, it will likely be renamed Hanwha Ocean.
South Korea had sought to find a new owner of DSME after the KDB acquired the ailing shipbuilder in 2008 in the wake of the global financial crisis.
(Updated with details)
Write to Hyung-Kyu Kim at khk@hankyung.com Yeonhee Kim edited this article.