A Major Hurdle Cleared
The marriage between Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering (DSME) has cleared a major hurdle by obtaining unconditional approval from China. Now, it needs to get permits from authorities in Korea, the European Union and Japan.
Korea Shipbuilding & Offshore Engineering (KSOE), a shipbuilding arm of Hyundai Heavy Industries Group, said on Dec. 28 that it has recently been notified of unconditional approval by Chinese authorities regarding the company's merger with DSME.
The State Administration for Market Regulation (SAMR) in China said in a notice that a review under Article 26 of the Anti-Trust Act of China has reached the conclusion that a business combination between the two companies would not restrict market competition.
This is the third approval after that of Kazakhstan in October 2019 and Singapore in August. Some industry insiders were concerned that China, Korea’s biggest rival in the shipbuilding industry, may oppose the merger in an effort to keep the Korean shipbuilding industry in check. A KSOE official said that the company made efforts to ease China’s concerns about market monopoly.
Now, the remaining nations are Korea, the EU and Japan. Among them, the EU has the strictest market competition law and major ship owners are based there. Initially, the European Commission planned to complete its review of the corporate combination on Jan. 10 but delayed the final decision date to Feb. 21 and then to June 2 and then indefinitely due to the spread of COVID-19. Analysts expect the EU to make a final decision in early 2021.
If Hyundai Heavy Industries succeeds in acquiring DSME, a mammoth-sized shipbuilder will be born. The two shipbuilders currently account for 70 to 80 percent of the world’s liquefied natural gas (LNG) and very large crude carrier (VLCC) markets.