FTC may approve Hanwha, DSME merger this month

Daewoo Shipbuilding & Marine Engineering (DSME)'s shipyard in Geoje, South Gyeongsang [YONHAP]

Hanwha's acquisition of Daewoo Shipbuilding & Marine Engineering (DSME) is expected to receive approval from Korea's antitrust regulator by the end of this month at the earliest, ending the protracted decision process for the 2 trillion-won ($1.5 billion) deal.

The Fair Trade Commission (FTC) commission is set to convene a plenary session this Wednesday or on April 26 at the earliest to decide on Hanwha’s takeover of DSME, according to local media reports. The commission generally holds a plenary session every Wednesday.

“We will conclude the review swiftly at the examiner level,” the FTC stated on Sunday, while it declined to confirm the exact schedule and details of its measures.

“Once the examiners table a report on the proposed merger case in the commission, and there are no major objections from Hanwha, the plenary session could be held sooner as processes can be omitted or shortened,” an FTC official in charge of companies’ merger told the Korea JoongAng Daily on Monday.

Five Hanwha companies — including Hanwha Aerospace, Hanwha Systems, Hanwha Impact Partners, Hanwha Energy Singapore and Hanwha Convergence — announced the plan to buy the troubled Korean shipbuilder in September last year.

The takeover deal got the go-ahead from seven out of eight jurisdictions so far, with Turkey being the first to approve the plan last month, followed by Britain, Japan, Vietnam, China, Singapore, and the European Union — leaving the home country as the last to make a decision.

The Korean antitrust watchdog's decision on whether to grant unconditional or conditional approval, including corrective measures, for the takeover is the focus of attention in the industry.

Some domestic shipbuilders, including HD Hyundai, raised concerns with the FTC about the possibility of DSME having an unfair advantage in bids for military ship contracts once it is purchased by the defense-focused Hanwha.

Yet relevant government agencies, such as the Ministry of Trade, Industry and Energy and the Defense Acquisition Program Administration, dismissed the concerns in opinions submitted to the FTC, according to reports citing unnamed sources.

Once the merger is approved, Hanwha companies will acquire a 49.3 percent stake and management rights in DSME by purchasing the shipbuilder's new shares through a rights offering.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]