Hyundai Heavy Industries' shipyard in Ulsan is seen in this file photo. Yonhap

DSME takeover bid could be resumed under Yoon's presidency

By Park Jae-hyuk

HD Hyundai's recent lawsuit against the European Commission's January decision to block Korea Shipbuilding & Offshore Engineering's (KSOE) proposed acquisition of Daewoo Shipbuilding & Marine Engineering (DSME) is seen to signal its willingness to resume the takeover bid under the incoming government despite its denial, according to industry officials, Tuesday.

Hyundai Heavy Industries (HHI) Group's holding company confirmed Monday that it sued the European Union's antitrust regulator on March 23 to ask the EU court to judge on the legality of the disapproval of DSME's purchase by KSOE, a subsidiary of HD Hyundai and a parent firm of HHI.

"We filed the lawsuit to ask the court to verify that it was unreasonable for the EU regulator to evaluate the shipbuilding market dominance based only on market share," an HD Hyundai official said. "Even if we win the lawsuit, the decision cannot be overturned, so we are not pushing for the acquisition again."

When KSOE signed a contract with Korea Development Bank (KDB) to acquire DSME, both sides agreed that the contract would be canceled unless all six overseas antitrust regulators approved the deal. Their contract has therefore been nullified, following the European Commission's veto.

Some industry officials, however, regarded HD Hyundai's recent legal action as a preparatory measure to resume efforts for the DSME takeover under the presidency of Yoon Suk-yeol, considering that the lawsuit was filed after his election and the president-elect promised to help DSME find a competent new owner as soon as possible.

"I will solve the problems surrounding DSME as soon as possible for the company to contribute to Geoje's regional economy and Korea's economic growth," Yoon said last month during an election campaign event on the South Gyeongsang Province island.

Immediately after the European regulator's rejection in January, KDB Chairman Lee Dong-gull urged HD Hyundai to take measures against the decision.

"Because it is critical to make sure that Korean industries are not pushed around easily by the EU, I personally hope Hyundai Heavy Industries will file lawsuits to ask for compensation and cancellation of the disapproval," Lee said during a press conference, Jan. 27.

HD Hyundai also said at that time that it would hold internal discussions on whether it should seek legal remedies to challenge the veto.

Its legal action came two months later.

Considering that the litigation will take a great amount of time, industry officials expect the shipbuilding group to have enough time to reconsider its acquisition of DSME. In addition, its rivals will likely avoid a bid for a DSME takeover until the end of the litigation, due to concerns about uncertainties.

There is also speculation that HD Hyundai will devise new strategies for the acquisition, capitalizing on the litigation to find out the logic behind the European regulator's decision.

"HD Hyundai will be able to justify its resumed bid for the DSME takeover, if the court rules in favor of the company," an industry insider said.