The previously announced merger between South Korean shipbuilder Samsung Heavy Industries and Samsung Engineering has been cancelled as shareholders opposed the move, the shipbuilding giant said in a filing to Korea stock exchange yesterday.
The shareholders voiced their concern that the USD 2.5 billion deal exceeded the agreed amount of stock purchase ceiling adding that, as a result, it could be damaging to shareholder value.
According to the filing, shareholders had requested the two companies to repurchase their stock for a higher-than-budgeted USD 1.5 billion, which resulted in the decision to pull back as the benefits were not as expected, especially since both companies’ shares took a plunge recently.
The merger between Samsung Heavy Industries and Samsung Engineering was decided in September, the objective being creatiation of a “world-class total solution provider for shipbuilding and onshore and offshore services.”
According to SHI, the merger ratio was supposed to be fixed at 1:2.36.
Under the plans, Samsung Heavy Industries issued new stocks so that the shareholders of Samsung Engineering can exchange their shares for the Samsung Heavy Industries’ shares and receive 2.36 Samsung Heavy Industries shares for every Samsung Engineering share they own.
Samsung Engineering, which has focused its business in onshore hydrocarbon plants, was supposed to diversify into high value-added projects such as onshore LNG and offshore plants by securing Samsung Heavy Industries’ offshore plant fabrication capabilities.
The merger was intended to give the two companies a chance to become a global top-tier EPC (Engineering, Procurement and Construction) company.
The decision to pull back from the merger could hamper the restructuring plans of the Samsung Group.
World Maritime News Staff