Update: Hanwha gets approval to acquire DSME

DSME's financial performance has continued to deteriorate in recent years amid efforts by the state-run Korea Development Bank to find a buyer for the naval shipbuilder. (Janes)

South Korea's Fair Trade Commission (FTC) has approved the Hanwha Group's proposed acquisition of a controlling stake in Daewoo Shipbuilding & Marine Engineering (DSME), one of the country's biggest naval shipbuilders.

The FTC announced on 27 April that it has approved a deal in which Hanwha Group subsidiaries – including its defence businesses, Hanwha Aerospace and Hanwha Systems – will acquire a 49.3% stake in the financially troubled shipbuilder. The acquisition will be worth KRW2 trillion (USD1.49 billion).

The FTC said that several conditions apply to the deal. These include a ban on Hanwha selling naval ship systems and components to DSME at discriminatory low prices. Hanwha is also required to allow government access to naval ship technologies owned by DSME.

Hanwha and DSME are also required to adhere to several non-disclosure obligations linked to the deal. The conditions will be in place for three years after the conclusion of the acquisition, the FTC said.

Hanwha told Janes that the group expects the DSME acquisition to be completed after a board meeting in May. A spokesperson said that a name for DSME – once the takeover was complete – had yet to be determined. The name ‘Hanwha Ocean' is one of several options being considered, the spokesperson said.