The headquarters of Hanwha Group in Seoul. Yonhap

Conglomerate likely to replace shipbuilder's CEO, executives

By Lee Kyung-min

Hanwha Group's acquisition of Daewoo Shipbuilding & Marine Engineering (DSME) was completed, Friday, after the government approved a motion for state-run Korea Development Bank (KDB) to sell part of its 55.68 percent stake in the debt-ridden shipbuilder to the country's seventh-largest conglomerate.

The shipbuilder's CEO Park Du-seon is highly likely to be replaced, largely because the conglomerate needs to remove any liabilities associated with the figure a close acquaintance of former President Moon Jae-in.

Whether Hanwha will install one of its affiliate heads to the shipbuilder's top management spot remains to be seen, in what market watchers say is almost a foregone conclusion.

The prospect is backed by the 5,000 unionized workers of DSME who have shown no opposition, as illustrated by the uninterrupted and successful due diligence at the shipbuilder's shipyard in Okpo, Geoje Island late last month. Their collective acceptance of the acquisition followed Hanwha's pledge to keep communication channels open to limit layoffs and to discuss other labor demands.

Whether and how fast the performance of DSME turns around will determine the success of the acquisition which was 14 years in the making. The firm's debt ratio stood at 1,291 percent as of the third quarter of this year. Operating losses in the first nine months of this year came to 1.19 trillion won ($909 million).

Hanwha will be able to hold a controlling stake of 49.3 percent at a takeover price of 2 trillion won, whereas stakes held by the state-run lender will decline to 28 percent.

The Fair Trade Commission (FTC) will approve the acquisition, a process that will be finalized when the go-ahead is issued by the relevant eight foreign antitrust authorities.

The 2 trillion won will be drawn from six Hanwha affiliates, including 1 trillion won from Hanwha Aerospace, formerly Hanwha Techwin. A total of 500 billion won will come from Hanwha Systems, an aerospace and defense affiliate.

Hanwha Impact Partners, a green energy tech firm, will pay 400 billion won, and three subsidiaries of Hanwha Energy will pay a combined 100 billion won.