Daewoo Shipbuilding & Marine Engineering to be sold to Hanwha Group for KRW2tn

September 27, 2022

Daewoo Shipbuilding & Marine Engineering (DSME) will be sold to Hanwha Group.

The Korea Development Bank (KDB) announced on Sept. 26 that it will sell part of its stake in DSME to Hanwha Group for about 2 trillion won. After the sale, KDB’s stake will be lowered from 55.7 percent to 28.2 percent

The bank’s stake sale plan was approved by the government at a meeting of the related ministries earlier on the day. The Ministry of Strategy and Finance, the Financial Services Commission, and the Ministry of Trade, Industry and Energy held a ministerial meeting at the Export-Import Bank of Korea in Yeouido at 7:30 a.m.

At the meeting, KDB Chairman Kang Seok-hoon reported on its stake sale plan.

KDB has allowed Hanwha Group’s major affiliates to issue new shares to finance the group’s acquisition of DSME. Hanwha Aerospace, Hanwha Systems and Hanwha Impact Partners will expand their capital by 1 trillion won, 500 billion won and 400 billion won, respectively. In addition, the three subsidiaries of Hanwha Energy will each raise 100 billion won by selling new shares.

Hanwha Group attempted to acquire DSME for about 6 trillion won in 2008, but failed because of difficulties in raising funds amid a global financial crisis. In recent years, the group has posted an outstanding performance in the defense industry. If it acquires DSME, it will be able to create synergy as DSME builds military vessels.

In relation to the sale of DSME, Kang said at a news conference that management consulting on DSME after KDB’s plan to sell it to Hyundai Heavy Industries was canceled in January showed that the possibility of the ailing shipbuilder normalizing management on its own was low, in consideration of the current level of its competitiveness and the market environment.

Kang said in a news conference on the 100th day of his inauguration on Sept. 14, “I think the way to save DSME is to strengthen R&D and find a new investor who can increase the company’s efficiency. We are working hard to sell DSME as quickly as possible, while at the same time strengthening its competitiveness.”

KDB sells its stake in DSME for 19,150 won per share, much lower than the closing price of 24,950 won on Sept. 26. This means that the bank regards DSME as a company that cannot be revived.