EU antitrust regulators have again halted their investigation into world No. 1 shipbuilding group Hyundai Heavy Industries’ (267250.KS) $1.8 billion merger with Daewoo (042660.KS), a European Commission filing showed.
This is the third time the EU competition enforcer has halted the probe, having done so previously while waiting for details and due to delays related to the coronavirus crisis.
The Commission warned in December that the deal to create a company with a 21 per cent market share could push up prices, saying that European shipping companies, among the two shipbuilders’ biggest customers, may be affected.
Last December, the Commission expressed concern that the proposed deal may push up ship prices, which will hurt the European companies’ competitiveness in the construction of cargo ships.
The deal needs regulatory approval from six countries — South Korea, China, Kazakhstan, Japan, the European Union and Singapore. Kazakhstan approved the deal in October 2019.
In March 2019, Hyundai Heavy Industries signed the deal to buy a 55.72 per cent stake in Daewoo Shipbuilding in a deal that could create the world’s biggest shipbuilder with a 21 per cent share of the global shipbuilding market.
In an order to acquire Daewoo Shipbuilding, Hyundai Heavy Industry Group has split Hyundai Heavy Industries into two entities — Korea Shipbuilding & Offshore Engineering (KSOE) Co., a subholding company that governs shipbuilding units under the group, and a reorganized Hyundai Heavy Industries Co.
KSOE currently manages the group’s three shipbuilding units — Hyundai Heavy Industries, Hyundai Mipo Dockyard Co. and Hyundai Samho Heavy Industries Co.
f the acquisition deal goes ahead, Hyundai Heavy Industries Group will have four shipbuilders under its wing — Hyundai Heavy, Hyundai Samho Heavy Industries, Hyundai Mipo Dockyard and Daewoo Shipbuilding.
Another aspect of the deal, industry sources said, is that the deal will hurt market competition in the shipbuilding field of liquefied natural gas (LNG) and liquefied petrochemical gas (LPG) carriers.