STX To Acquire Daehan Shipbuilding This Week

STX is planning to acquire Daehan Shipbuilding this week. According to the industry on the 8th, STX have completed negotiations with creditors regarding the acquisition of Daehan Shipbuilding, and is planning to finalize its takeover. According to a high-ranking official of STX, negotiations with creditors are in the final stage, and we will be able to finalize the takeover by this week.
Daehan Shipbuilding has finally found a new owner, five months since it opened auctions on March 16. Main participants in the auction were STX and Al-Shaheen, a shipping company from the United Arab Emirates. STX had a more favorable position, thanks to doubts regarding Al-Shaheen's financing capacity.
STX and the creditors had conflicting stances regarding debt-for-equity swap, which amounted to several hundred million won. However, they have reached agreements on partial postponement of debt, debt-for-equity swap, investment upon acquisition, and other main issues after lengthy discussions.
STX has been growing by acquiring weak firms, and this deal will once again enable them to grow through M&A (mergers and acquisitions).
STX can also shed its main worry - the relatively small size of its main base, the Jinhae shipbuilding yard. Daehan Shipbuilding possesses a 140,000m2 dock at Haenam, Jeollanam-do. This site has an advantage of easy access to the port and proximity to nearby shipbuilding clusters. Moreover, Daehan Shipbuilding has two more docks with a total area of 2.1 million m2. Once STX acquires Daehan Shipbuilding, its total shipbuilding yard will amount to 3.3 million m2.
STX is planning to maximize its advantage by optimizing Daehan Shipbuilding for building of large vessels. Part of the orders for the Jinhae shipbuilding yard will be transferred to the Haenam site. This deal is expected to maximize synergy effects while decreasing production costs through joint purchasing of engines and equipments.
According to an official of STX, "once STX acquires Daehan shipbuilding, our production capacity will rival the 'Big 3' shipbuilding firms of Korea. STX will upgrade its competitiveness once we strengthen our global production network, increase cooperation with China and Europe, and transform the Jinhae and Haenam shipbuilding yards into a base for building super vessels and large plants."
Daehan Shipbuilding had ranked 35 in the world, in terms of total orders. Their last performance was 372.3 billion won in sales and 23.3 billion won in loss, due to the harm brought by the financial crisis.