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World's biggest shipbuilders to merge



A maritime behemoth is set to be created following the anticipated merger of Hyundai Heavy Industries, the world’s largest shipbuilder, with second-ranked Daewoo Shipbuilding and Marine Engineering. If successful, the merger will create a company with a combined global market share of 21 percent.
The merger of Hyundai Heavy and Daewoo Shipbuilding will create the world's largest shipbuilding company.
The merger is taking place in the midst of a revival in the shipbuilding market as orders for liquefied natural gas and large crude carriers are being placed.

The deal will involve Hyundai Heavy Industries purchasing Korea Development Bank’s (KDB) entire 55.7-percent stake in Daewoo. According to Chairman of KDB Lee Dong-gull, the merger will ease competition and excess capacity which has been largely responsible for depressed ship prices in recent years. In the past, Hyundai and Daewoo have competed fiercely for orders, at times even underbidding each other with poor consequences for their finances.

The merger is expected to go ahead, unless Samsung Heavy makes a better offer. If this does not occur, then a final decision on the deal should be made in March, according to KDB officials.

In a statement, Hyundai Heavy Industries said that its acquisition of Daewoo was aimed at ‘boosting the competitive edge of South Korea’s shipbuilding industry by maximising the synergy effect’. In recent years South Korea’s shipbuilding industry has faced increased regional rivalry from cheaper shipbuilders based in China, which has squeezed profit margins, with Hyundai Heavy announcing net losses of 633 billion won ($569 million) for 2018.

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Tags: Engineering
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