News and Updates on Hyundai Heavy Industries Group
HHI Group Files Request for Approval on Business Combination with DSME
Hyundai Heavy Industries (HHI) Group has officially applied for approval on the business combination with Daewoo Shipbuilding & Marine Engineering (DSME), a key process for the planned acquisition.
Korea Shipbuilding & Offshore Engineering (KSOE) said it submitted on July 1 a request for formal approval from Korea’s Fair Trade Commission (KFTC) on the business combination with DSME. KFTC assesses whether or not to approve a deal after a comprehensive review of the market demarcation and potential threats to competition that the deal may bring to the market, along with a range of other factors.
In addition to KFTC, HHI Group also aims to obtain approvals from the respective authorities of the EU, Japan, China and Kazakhstan, planning to expand the list of the jurisdictions where the group will file similar approval requests.
As for the EU, the group commenced on an advance consultation process in April this year as required under the relevant regulation.
While assessment details may vary from one jurisdiction to another, the regulators in charge of ensuring fair competition generally require a business combination deal between entities that reach certain thresholds in terms of revenue, assets, market share and others to be notified to the authorities for their official approval.
Home to a number of major shipping companies, the EU has a two-phased merger control process in place consisting of a general investigation (Phase I) and an in-depth investigation (Phase II), which may take several months following the filing of a request.
According to the EU-published statistics, of the 7,311 requests (including 196 withdrawn requests) filed over the last 30 years, 6,785 cases obtained approval (including conditional approval on 313) at Phase I and 191 cases did (including conditional approval on 129) at Phase II, with only 33 cases rejected.
“We took extra care to make sure we are thoroughly prepared to satisfy different thresholds of different jurisdictions used in their legitimacy assessment of our business combination, and will provide the authorities with faithful and complete explanations as needed in line with their assessment schedules and procedures,” said an official of HHI Group.
The official went on to stress “utmost efforts will be made to ensure all related steps required for the acquisition of DSME, including obtainment of business combination approvals and the stock swap deal with Korea Development Bank, are completed without delay.”
In the run-up to the forthcoming acquisition of DSME, HHI Group completed in June the split of HHI into the two entities of KSOE and a reorganized HHI.