By Acquiring Daewoo Shipbuilding & Marine Engineering
Hanwha Group will acquire two trillion won worth of new shares to be issued by Daewoo Shipbuilding & Marine Engineering (DSME) to acquire the ailing shipbuilder, the group announced on Dec. 16.
The group's affiliates that will participate in DSME's capital increase are Hanwha Aerospace (1 trillion won), Hanwha System (500 billion won), Hanwha Impact Partners (400 billion won), and three subsidiaries of Hanwha Energy (100 billion won).
After the paid-in capital increase, Hanwha will secure a 49.3 percent stake in DSME, becoming its largest shareholder, while Korea Development Bank will become the second-largest shareholder with a 28.2 percent stake.
If Hanwha Group’s acquisition of DSME is completed as planned, the business group will become a general defense contractor capable of producing land, sea and air defense systems. Its primary goal is to grow into one of the world’s top 10 defense companies by 2030.
Experts expect that Hanwha Group will be able to enter new markets by developing commercial ships capable of autonomous navigation by combining Hanwha’s cutting-edge marine system technology with DSME’s capacity to mass-produce ships, and eco-friendly ships by utilizing Hanwha’s eco-friendly energy storage system (ESS) technology, which is currently used for submarines.
In addition, the group can build a new green energy value chain by combining its energy industry capabilities such as LNG, ammonia, hydrogen, and wind power with DSME’s energy production facilities and transportation technology.
The combination of the two companies will enable them to expand their global export networks and greatly expand their export markets. Sharing their sales networks in the Middle East, Europe, and Asia is expected to boost exports of not only Hanwha’s weapon systems but also DSME’s flagship products, which are submarines and battleships.
Hanwha’s final acquisition of DSME is expected to take more than three months as it needs to obtain domestic and foreign approval on the business combination.
Hanwha has an immediate task of normalizing DSME, whose cumulative operating loss for the first three quarters of this year came in at 1,197.4 billion won. Its debt ratio on a consolidated basis reached 1,291 percent in the third quarter of this year.