A contract was established for creating the global heavyweight in South Korea about the plans of merging with the world’s top two shipbuilding groups. South Korea’s Hyundai Merchant Marine (HMM) or Hyundai Heavy Industries declared its share trade deal of about $2.00 Bn, in obtaining the 2nd largest shipbuilding firm of the world, Daewoo Shipbuilding & Marine Engineering. This deal of merging will be an outcome in the formation of company will govern over 20% of the sector of shipbuilding in the world.
Hyundai Heavy Industries will acquaint the maximum of stake in debilitating Daewoo from government in associating the position as the largest shipbuilder of the world. Hyundai Heavy Industries encountered the total loss of about 635 Billion in 2018, claims that its achievement of Daewoo was targeted at “increasing the economic power of industry of shipbuilding of South Korea by increasing the effect of synergy”.
In 2018 the worse performance was reported in which world’s largest shipbuilder accused the low demand and high steel cost. Hyundai’s holding company are supposed to increase the funds for getting hold of with the sale of the portion of pale in Hyundai Oilbank Co.Ltd refinery to Saudi Aramco for increasing the demand up to 2.0 trillion. In the stock exchange, Hyundai stated that “Daewoo will receive liquidity support of about $2.25 Bn from Hyundai and KDB”.
State-funding of Korea Development Bank (KDB) declared in the proclamation that Hyundai had approved to take over their stake. KDB owns about 55.8% of Daewoo, proposes to trade the stake and combine the three biggest shipbuilders.
KDB Chairman Lee Dong-gull commented, “The combination of Hyundai and Daewoo, along with Samsung Heavy Industries Co Ltd would ease competition and excess capacity, which have depressed ship prices." KDB Chairman Lee Dong-gull even claimed that deal will “increase the essential effectiveness of Daewoo, at a time when the risk from latecomers in Singapore and China is developing”. Lee Dong-gull also warned that it will need numerous months to receive appreciation from anti-trust regulators from the associated countries.
The deal occurs at a time when the sector of shipbuilding across the world is getting better from a global trade and industry downturn that had led to huge losses and thousands of redundancies.