SEOUL, Jan. 30 (Korea Bizwire) — South Korea’s Hyundai Heavy Industries Group is seeking to buy its smaller rival, Daewoo Shipbuilding & Marine Engineering, industry sources said Wednesday, in what could be a major shakeup in the sector.
The country’s top shipbuilder is in talks with state-run Korea Development Bank (KDB), a creditor bank that owns a 55.7 percent stake in Daewoo Shipbuilding, they said.
If the takeover goes ahead, the South Korean shipbuilding industry is expected to be dominated by two major shipbuilders — Hyundai Heavy Industries and Samsung Heavy Industries Co.
“We are in talks with KDB, but it is not the stage where we can unveil specifics,” an official at Hyundai Heavy Industries said.
The lender is known to have plans to hold a board meeting on Thursday to discuss the issue.
South Korean shipbuilders, once a cornerstone of the country’s economic growth and job creation, had been reeling from mounting losses in the past few years, caused by an industrywide slump and a glut of vessels amid tough competition with Chinese rivals.
But Korean shipyards ranked first in terms of annual orders clinched for the first time in seven years in 2018. The shipbuilding sector is expected to post a full-fledged recovery this year, according to industry watchers.
The local shipbuilding industry should be overhauled in a way that two major players could dominate the sector to better compete against Chinese rivals and tackle sectoral ups and downs, the chief of Daewoo Shipbuilding & Marine Engineering has said.
“I will focus on making Daewoo Shipbuilding a small but firm company ahead of a sale,” CEO Jung Sung-leep said.