Report: Samsung Heavy Unlikely to Bid for DSME Stake

LNG Carrier construction at DSME; Image Courtesy: Wikimedia Commons/Towel401 under public domain license

South Korean shipbuilder Samsung Heavy Industries (SHI) will unlikely submit its offer to buy a majority stake in its compatriot Daewoo Shipbuilding & Marine Engineering (DSME), Yonhap reported referring to industry sources.

As explained, Samsung Group conglomerate, a parent company of SHI, doesn’t have intentions to further expand in the shipbuilding sector.

Korea Development Bank (KDB), DSME’s largest shareholder, is said to have approached Samsung Heavy regarding the potential takeover. SHI, which is currently reviewing the proposal, has until the end of this month to decide on the matter.

At the end of January 2019, the world’s largest shipbuilder Hyundai Heavy Industries (HHI) set sights on acquiring a major interest in DSME.

The company reportedly signed a conditional agreement with KDB for the purchase of shares. The state-controlled bank owns a total of 55.7 percent stake in DSME, with an estimated worth of almost USD 2 billion.

Separately, on February 11, HHI’s labor union demanded from the company job guarantees in order to proceed with the planned acquisition. HHI’s workers are worried that the acquisition would lead to job losses and will decide on whether to go on strike next week.

Together, the country’s three shipbuilders account for the majority of global orderbook and currently have more than 170 newbuilding orders, VesselsValue’s data shows.

The takeover, if proceeded, would create two major players dominating the South Korean shipbuilding industry in the future.