HD KSOE's acquisition of STX Heavy conditionally approved
Logos of HD Korea Shipbuilding & Offshore Engineering (KSOE) and STX Heavy Industries
In July 2023, the shipbuilder signed a contract with a private equity firm to buy shares in STX Heavy, a major marine engine and parts manufacture, to become its largest shareholder with a 35.05 percent stake.
"We judged that the deal may hinder fair competition in the domestic marine engine market, so we've decided to approve the merger on the condition that the shipping company take corrective measures," the Fair Trade Commission (FTC) said, referring to the reasons for the conditional permission.
The measures include banning the refusal of supply requests for crankshafts, a pivotal engine component, and banning any postponement in supplies as well as ensuring the minimum volume of supply and limiting price increases, which will be in effect for three years.
The FTC was concerned that the merged unit could refuse to provide crankshafts to competitors Hanwha Engine and STX Engine, which will prevent them from producing their shipbuilding engines.
"The three-year period can be extended if needed given market circumstances," the state regulator said.
Under the acquisition initially proposed last July, the intermediate sub-holding company of HD Hyundai will take over 6,520,000 shares in STX Heavy Industries held by Pinetree Partners, along with 5,360,000 newly issued shares via a third-party allotment. This will bring HD KSOE's stake in the company to 35.05 percent, positioning it as the largest shareholder.
The acquirer explained at the time that the purchase is intended to bolster HD KSOE's large engine production capacity and strengthen its position in the highly competitive ship engine market, adding that the company will support STX Heavy Industries' independent management system.
BY PARK EUN-JEE, YONHAP [park.eunjee@joongang.co.kr]
with the Korea JoongAng Daily
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