Hyundai Heavy Industries Group, a major shipbuilding conglomerate in South Korea, has officially started the process to earn approval from anti-trust regulators for its proposed takeover of Daewoo Shipbuilding and Marine Engineering Co. (DSME).
Korea Shipbuilding & Offshore Engineering Co. (KSOE) announced on July 1 that it has submitted an application for merger with DSME to South Korea's Fair Trade Commission (FTC). The FTC will make a decision after having a comprehensive review of the possible impacts that the merger will have on the shipbuilding market.
Hyundai Heavy Industries Group has submitted similar applications to antitrust watchdogs in five countries, such as Japan, China, Kazakhstan and the European Union. The shipbuilder is also planning to submit additional applications to other countries.
The group said it has been discussing the matter with the regulators of the EU since April before submitting its pre-merger filings. Each country has different examination standards on M&A deals but it imposes a duty on companies which satisfy certain standards, including sales, asset and market share, to report possible M&As.
The examination on M&A by the EU in where major shipbuilders are located is divided into two stages – first stage of general screening and second stage of intensive screening. The review process by the EU regulators will take months after submitting an application.
The data on M&As from the EU showed that 6,785, including 313 conditional cases, out of 7,311 M&A requests received over the last 30 years, including 196 voluntary withdrawal cases, received approval in general screening and 191, including 129 conditional cases, in intensive screening, while only 33 cases failed to attain approval.
Meanwhile, Hyundai Heavy Industries Group completed the spinoff of Hyundai Heavy Industries Co. into KSOE (holding company) and Hyundai Heavy Industries (subsidiary) in June.