The Korea Herald


Hanwha’s DSME takeover to be approved next week

Korea’s Fair Trade Commission to make final decision on April 26

By Kan Hyeong-woo

Published : April 19, 2023 - 15:27

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Logos of Hanwha, Daewoo Shipbuilding and Marine Engineering (Provided by each company) Logos of Hanwha, Daewoo Shipbuilding and Marine Engineering (Provided by each company)

Hanwha Group’s acquisition of Daewoo Shipbuilding and Marine Engineering is nearing its end as South Korea’s Fair Trade Commission is expected to approve the takeover next week.

The antitrust regulator on Tuesday sent Hanwha and DSME the examination report over the acquisition and decided to include the report on the agenda for the general meeting on April 26.

The examination report includes an opinion to impose corrective measures to ban discrimination against competitors under the premise of allowing the takeover, according to industry sources.

During the meeting, the FTC will eventually determine whether the deal would hinder the market’s fair competition and the degree of measures to prevent unfair practices that the acquisition could pose in the future.

If a green light is given next week, the FTC's ruling would come about four months after Hanwha submitted the proposal to review its takeover of DSME on Dec. 19. The conglomerate inked a 2 trillion won ($1.51 billion) contract to buy a 49.3 percent stake in DSME from the state-run Korean Development Bank then.

The FTC previously said it has had to take the time to assess the acquisition as there were concerns raised by multiple companies over Hanwha’s potential monopoly in government bids for battleships, pointing to Hanwha’s significant market share in weapons systems.

The FTC did not release the names of the companies. Outside of DSME, Hyundai Heavy Industries, HJ Shipbuilding and Construction and SK Oceanplant, previously known as Samkang M&T, are the country’s leading firms in the battleship business.

The concerns pointed to possibilities that Hanwha could sell battleship parts at a higher price to competitors or discriminately hand out technical information to put DSME in a better position for battleship bids.

Regarding the concerns over the acquisition, the Defense Acquisition Program Administration sent a statement to the FTC saying that Hanwha's acquisition of a majority stake in DSME would not limit competition in the battleship market.

The takeover deal has received necessary approval from all of the seven foreign antitrust regulators -- Britain, China, the European Union, Japan, Singapore, Turkey and Vietnam -- except for the Korean authorities.

The FTC has faced criticism from residents and civic groups in Geoje -- where DSME's shipyard is located -- for delaying the acquisition many see as a lifeline to the bleeding shipbuilder and ailing local economy.