Korea Shipbuilding & Offshore Engineering, a subsidiary of Hyundai Heavy Industries Holdings, announced on Sep. 4 that it started discussions with the Japan Fair Trade Commission regarding Hyundai Heavy Industries Group’s acquisition of Daewoo Shipbuilding & Marine Engineering.
“Prior procedures are necessary in Japan, as well as the European Union, for a business combination approval,” Korea Shipbuilding & Offshore Engineering explained, adding, “The initiation of the consultation means that a screening process has begun in Japan concerning the business combination.”
Some experts point out that the Japanese commission may put the brakes on the combination. Last year, the Japanese government filed a WTO suit against the South Korean government, claiming that its shipbuilding industry restructuring measures negatively affected the shipbuilding industry of Japan.
In addition, the Japanese government requested bilateral consultations in the WTO on Nov. 13 last year, saying that the measures are related to the purchase, sale, marketing, building and development of merchant vessels such as oil tankers, LNG carriers and container carriers. The Shipbuilders’ Association of Japan also said in June this year that the competition authorities of multiple countries will not just stand by and watch the combination.
The screening application of Korea Shipbuilding & Offshore Engineering in Japan marked the end of the application processes for the combination. Korea Shipbuilding & Offshore Engineering submitted the same application to the Korea Fair Trade Commission in July this year. The prior procedures in the European Union have been underway since April and the same application was submitted in China, Kazakhstan and Singapore on July 22, Aug. 15 and Sep. 2, respectively.
Once Korea Shipbuilding & Offshore Engineering passes every examination, the company and Korea Development Bank, which is the largest shareholder in Daewoo Shipbuilding & Marine Engineering, can complete the acquisition process by exchanging their shares.