Hanwha makes bid to acquire controlling share of STX Heavy Industries

Hanwha's logo at its headquarters building in Jung District, central Seoul [YONHAP]

Hanwha made a preliminary bid to acquire a controlling share of STX Heavy Industries, a local ship engine maker.

Hanwha intends to buy 47.81 percent of STX Heavy Industries from its largest shareholder Pinetree Partners, a local private equity firm, according to media reports.

The amount of the deal is estimated at around 100 billion won ($78.7 million).

The market cap of STX Heavy Industries stood at 200.9 billion won on Tuesday.

Hanwha did not confirm the reports.

Hanwha’s potential competitors for the STX acquisition include Korea Shipbuilding and Offshore Engineering, the intermediate sub-holding company of HD Hyundai, which was reported on Dec. 16 to have submitted a letter of intent to join the preliminary bid.

As Hanwha aims to acquire Daewoo Shipbuilding and Marine Engineering (DSME) by next year, the addition of STX Heavy Industries is likely to strengthen the company’s portfolio in the shipbuilding sector.

Hanwha recently signed a 2-trillion-won deal to acquire a controlling share of DSME, the troubled shipbuilder that has been controlled by state-run Korea Development Bank.

As DSME will issue 104,438,643 new shares, Hanwha will be the new largest shareholder with a 49.3 percent stake.

The acquisition is expected to be completed by the first half of next year, after receiving approvals for corporate consolidation from local and overseas regulators.

Following the media reports of a possible acquisition deal, STX Heavy Industries’ share price has been on the rise.

STX closed at 7,080 won on the Kospi bourse Tuesday, up 1.29 percent. It soared 15.74 percent to reach 8,090 won right after the market opening that day.

Its share price rose 7.04 percent on Monday when Hanwha’s participation in the bid was initially made known.

STX Heavy Industries will choose a preferred bidder next February after the final bidding, and the stock purchase agreement is expected to be closed in the first quarter of next year.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]