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Saturday, March 9, 2019 

Hyundai Heavy Industries Group and Korea Development Bank (KDB) have signed a definitive agreement on HHI’s acquisition of Daewoo Shipbuilding & Marine Engineering (DSME).

KDB will contribute to the tentatively named Korea Shipbuilding & Offshore Engineering (KSOE) named tentatively), which will be established as a sub-holding company spun off from HHI. Under this new entity will be the group’s shipbuilding companies including HHI. Shares in DSME will be transferred to KSOE in return for an equity stake in the new entity. 

The agreement is dependent on the outcome of due diligence and unless this reveals a fact or matter that would have a material adverse effect on either of the target companies then it will be officially authorised by the government authorities. 

During the signing of the agreement, it was declared that employment for DSME workers will be secured as will the relationships with DSME’s current business partners. DSME’s current management structure will remain in place for the time being.

In a joint statement, HHI and KDB said they are entering into this agreement “with an ultimate aim of stimulating employment and revitalizing the local economy,” pledging to maintain the current management structure of DSME, keep employment of DSME’s workers secure and continue the business relationships with the existing subcontractors and suppliers of DSME. 

Kwon Oh-gap, Vice Chairman & CEO of HHI Holdings, said: “The decision to welcome DSME to the HHI Group is deeply rooted in our belief that it is a mission given to our group, as the trailblazer and long-standing leader of Korea’s shipbuilding sector, to take the initiative in elevating the industry to new heights.” 

He added: “HHI Group’s post-acquisition strategy is, to have its four shipyards, which would now include DSME as the latest addition to the group’s portfolio of shipbuilding business, focused on design, manufacturing and sales activities, which will be controlled by KSOE, specialised in R&D and engineering.”

With improving market conditions, the parties believe “there is no better time for HHI and DSME, the two leading shipbuilders of the nation, to achieve the shared aim of taking the global shipbuilding sector to the next level. “

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