[Asia Economy Reporter Song Hwajeong] The government and the major shareholder, Korea Development Bank, confirmed on the 26th that Daewoo Shipbuilding & Marine Engineering (DSME) will be sold as a whole to Hanwha Group, and it is reported that they have begun procedures for the finalization process. Considering DSME's market capitalization (approximately 2.3 trillion KRW) and Korea Development Bank's 55.7% stake, the sale price is expected to be in the 2 trillion KRW range, including a management premium.
The government reportedly shifted to a 'quick sale' approach due to Hanwha Group's recent acceleration in the defense sector and its concrete achievements, as well as the expected synergy effects with DSME's special vessels (military) business such as submarines. Kang Seok-hoon, chairman of Korea Development Bank, also stated at a press conference marking his 100th day in office on the 14th, "For DSME to continue growing, continuous investment is necessary, but such investment is difficult under Korea Development Bank," adding, "A quick sale is needed for DSME to break away from its current state." Thus, DSME will meet a new owner for the first time in 21 years since graduating from workout (financial improvement process) in 2001.
According to the government and financial circles on the 26th, the government held an emergency industry and economy ministers' meeting at 7:30 a.m. at the Export-Import Bank of Korea in Yeouido-dong, Yeongdeungpo-gu, Seoul, to discuss the DSME sale plan. It is reported that Kang Seok-hoon, chairman of Korea Development Bank, reported on the direction of handling DSME, including the plan to sell DSME to Hanwha Group.
At the National Assembly's Planning and Finance Committee meeting held at 10 a.m. that day, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho and Export-Import Bank President Yoon Hee-sung were expected to attend and report on the handling plan for DSME. Once the DSME sale plan is finalized, the Korea Development Bank board meeting will be held in the afternoon, followed by a briefing related to the sale by Chairman Kang Seok-hoon after the board's resolution.
Hanwha Group was selected as the preferred bidder in 2008 by offering a price exceeding 6 trillion KRW, but withdrew from the acquisition after requesting adjustments to the sale price due to the global financial crisis, which were not accepted. At that time, only about 1.26 trillion KRW out of the 3.15 trillion KRW performance bond was refunded.
Regarding this sale, controversy over a 'fire sale' is inevitable. It is known that public funds injected into DSME have reached 4.2 trillion KRW (2.6 trillion KRW from Korea Development Bank).
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