SEOUL, Jan. 14 (Yonhap) — South Korea’s antitrust regulator said Friday it will end its deliberation of Hyundai Heavy Industries Group’s proposed acquisition of its smaller rival Daewoo Shipbuilding & Marine Engineering Co., as the company withdrew its tie-up review proposal following the veto by European authorities.
The European Commission vetoed Hyundai’s proposed merger late Thursday on concerns that the combination of the two major shipbuilders could hurt competition in the market of liquefied natural gas carriers.
The commission’s decision made it impossible for Hyundai Heavy Industries, the world’s largest shipbuilder, to proceed with its proposed acquisition.
The Fair Trade Commission said it will end the merger review, as Hyundai withdrew its proposal for the regulator to review the deal.
In March 2019, Daewoo Shipbuilding’s main creditor, Korea Development Bank, agreed to provide the 56 percent stake it holds in Daewoo Shipbuilding to Hyundai Heavy in exchange for a stake worth 1.25 trillion won (US$1 billion) in Korea Shipbuilding & Offshore Engineering Co. (KSOE).
Hyundai Heavy Industries Holdings Co., the holding company of Hyundai Heavy Industries Group, holds a 36 percent stake in KSOE. KSOE is the group’s subholding company and has three affiliates — Hyundai Heavy Industries Co., Hyundai Mipo Dockyard Co. and Hyundai Samho Heavy Industries Co. — under its wing.
Under the initial agreement, Hyundai Heavy had planned to raise 1.25 trillion won through the sale of Daewoo Shipbuilding shares to pay back Daewoo’s debts after acquisition.
The EU’s decision serves as a major setback for the South Korean government’s efforts to restructure the shipbuilding industry with the combination of the two shipyards.
The government said the deal’s collapse will not have major impacts on the shipbuilding industry, as the business has bottomed out and orders of high-end liquefied natural gas carriers and offshore facilities have rebounded.