EU nixes shipbuilding merger between Hyundai Heavy and Daewoo

Posted on : 2022-01-14 16:58 KST Modified on : 2022-01-14 16:58 KST
This comes three years into the Korea Development Bank’s attempt to sell the shipbuilder
(provided by Hyundai Heavy Industries)
(provided by Hyundai Heavy Industries)

Europe’s antitrust regulator has torpedoed the Hyundai Heavy Industries Group’s attempted takeover of Daewoo Shipbuilding & Marine Engineering. That’s the latest setback in the Korea Development Bank’s attempt to sell the shipbuilder, which began three years ago.

The European Commission said on Thursday it was banning any merger between the two companies. That came three years after the Korea Development Bank signed a basic agreement to sell its entire stake in Daewoo to Korea Shipbuilding & Offshore Engineering (Hyundai Heavy Industries at the time).

The outcome was partly foreseen since Hyundai Heavy didn’t submit a corrective plan in response to the commission’s concerns about monopoly. Except in the case of unconditional approval, the European Commission’s review of business combinations is based on the company’s corrective plan. In such cases, the commission grants approval on the condition that the company implements its corrective measures.

But the commission can ban a business merger if the company’s corrective measures fail to address competition concerns or if the company doesn’t submit a corrective plan at all, as in the case of Hyundai Heavy.

“I’m told we didn’t submit a corrective plan because we thought the merger would be meaningless if it were accompanied by structural measures such as an asset sale,” said a source at Hyundai Heavy.

That makes it all but certain that Hyundai Heavy’s acquisition of Daewoo will fall through.

Hyundai Heavy can try to seek a judgment from a European court on the commission’s decision, but industry insiders don’t think a court is likely to reach a different conclusion. If they are to pursue such an effort, a lawsuit would have to be filed within two months of the commission’s decision.

By Lee Jae-yeon, staff reporter

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