HHI seeks DSME deal approval

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HHI seeks DSME deal approval

Hyundai Heavy Industries has started the process of seeking formal approvals from antitrust regulators in a number of jurisdictions for its acquisition of Daewoo Shipbuilding & Marine Engineering (DSME).

If approvals are granted, and if the merger plan is completed, Hyundai Heavy Industries (HHI) will likely become the world’s largest shipbuilder.

The company announced in a statement Tuesday that it submitted a formal request for approval to the Fair Trade Commission (FTC) on Monday. It also said it has decided to make similar requests to antitrust regulators in Japan, China, Kazakhstan and the European Union (EU).

It may submit additional requests to other countries as needed.

Approvals could take months.

The FTC has 30 days to review the proposal and can extend its review period to 90 days if necessary. The Korean shipbuilder added that it has been working with EU regulators since April to prepare a filing, which could also take months to be approved.

“We have carefully prepared to meet the standards of all countries and will faithfully explain our deal in accordance with the review procedures and schedules for each country,” said an HHI spokesperson in a statement.

The Tuesday announcement came after shareholders approved the splitting of Hyundai Heavy at the end of May as the first step toward the acquisition of DSME.

At a meeting held at the University of Ulsan, shareholders voted in favor of the proposal to split the shipbuilder into two companies: Korea Shipbuilding & Offshore Engineering and Hyundai Heavy Industries, the operating company.

In March, Hyundai Heavy signed a 2-trillion-won ($1.7-billion) deal with the Korea Development Bank to buy DSME. Under the terms of the deal, Hyundai Heavy Industries was to be divided into an investment and research and development company, and a reorganized Hyundai Heavy.

Hyundai Heavy’s unionized workers have violently opposed the merger, as the planned split would force the operating company to inherit more than 7 trillion won of debt, a burden that could be used as grounds to lay off more workers.

They have also contended that the merger is a means for Hyundai Heavy Industries Group Chairman Chung Mong-joon, the largest shareholder of Hyundai Heavy Industries Holdings, to pass leadership of the group to Chung Ki-sun, his eldest son.

Hyundai Heavy rebutted the accusation, saying that the new operating company will not be burdened with the entire debt as other companies in the group will also be taking responsibility.

BY KO JUN-TAE [ko.juntae@joongang.co.kr]
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