South Korea’s Hyundai Heavy Industries (HHI) has extended the deadline of its proposed acquisition of rival shipyard Daewoo Shipbuilding & Marine Engineering (DSME), it has been announced.
The delay provides a new investment deadline of 30 June 2021, with an expectation that HHI will formally acquire DSME’s shares by the end of 2021. The previous investment deadline was September 2020.
The delay was announced on the Korean stock exchange by Korea Shipbuilding & Offshore Engineering (KSOE), a holding company under HHI that plans to integrate DSME into business operations once the acquisition is complete.
KSOE said the delay follows HHI’s revision of the preliminary acquisition agreement it signed in 2019 with DSME’s major shareholder and creditor, the state-run Korea Development Bank (KDB).
KSOE said the revision was a result of continuing delays in securing regulatory approvals for the transaction, specifically from the European Union.
On announcing the acquisition in March 2019, HHI said the deal will require regulatory approval from five nations where the two companies have prominent profiles – China, Japan, Kazakhstan, Singapore, and South Korea – as well as the EU.
China, Kazakhstan, and Singapore have approved the transaction. The Covid-19 pandemic has delayed the approval process in the remaining states, although these permissions are expected to be granted within the next few months.
KSOE’s stock exchange filing also confirms that HHI’s proposed acquisition of DSME will be worth about KRW2 trillion (USD1.8 billion), featuring HHI’s acquisition of 59.7 million DSME shares at a price of nearly KRW35,000 each. The deal will give HHI a controlling 55.7% stake in DSME.
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