After clearing the last hurdle to acquire the fourth-largest shipbuilder in the world and realising its goal that began in 2008, Hanwha Group, South Korea’s seventh-largest conglomerate, plans to transform into a global defence company by maximising synergies between Daewoo Shipbuilding & Marine Engineering Co. and its current divisions, as reported by Pulse.
Hanwha Group’s acquisition
South Korea’s antitrust regulator has approved Hanwha Group’s acquisition of a controlling 49.3% stake in Daewoo Shipbuilding, subject to corrective measures to prevent potential anti-competition practices for defence-related orders. Hanwha must not discriminate against rivals in the pricing of military vessel equipment, unfairly refuse to provide information or share trade secrets with affiliates. Five Hanwha companies will participate in a $1.49 billion rights offering to acquire the stake and control of Daewoo Shipbuilding, which may be renamed Hanwha Ocean. Hanwha Group, a global leader in the solar industry, began as an explosives business and has diversified into finance, distribution, leisure, and chemical businesses.
Strong presence in the Army and air force
Vice Chairman Kim Dong-kwan is pushing for Hanwha Group to become a comprehensive defence company representing Korea. With the acquisition of Daewoo Shipbuilding, Hanwha now covers land, sea, and air capabilities. While Hanwha has a strong presence in army and air force capabilities, it has yet to enter the warship and submarine business. Daewoo Shipbuilding, on the other hand, has been designing and building destroyers and next-generation battleships for the navy, including the country’s first independently designed and built submarine, Dosan Ahn Chang-ho, in 2021.
Back on track
Hanwha Group’s priority is to normalize the management of Daewoo Shipbuilding, which has been experiencing operating losses and a high debt-to-equity ratio. Hanwha needs to reform the shipbuilder’s management and establish a relationship with its labour union. The bigger challenge for Hanwha is to boost the shipbuilder’s competitiveness, as its orders have declined significantly, and it has been losing key talents to rival companies. Hanwha plans to combine its defence sector capabilities with Daewoo Shipbuilding’s world-class design and production capabilities to put the troubled shipbuilder back on track as soon as possible.
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Source: Pulse
