Singapore Begins Review of Proposed Hanwha Acquisition of DSME

Singapore regulatory review of DSME acquisition
Regulatory reviews are beginning for the acquisition of DSME by Hanwha Group (file photo)

Published Jan 25, 2023 4:36 PM by The Maritime Executive

The Competition and Consumer Commission of Singapore is commencing a review of the proposed acquisition of South Korea’s Daewoo Shipbuilding & Marine Engineering by the Hanwha Group. While saying that they believed Hanwha’s acquisition of 49.33 percent of the stock of DSME would have little impact on competition in Singapore, the companies were required to file an application to the committee in part because Hanwha has operations in Singapore.

Hanwha filed the application with the committee on January 16, a month after the group completed the purchase agreement for the shares of DSME with the Korean Development Bank. Hanwha asked for a decision on whether the proposed transaction would infringe on Singapore’s Competition Act, which prohibits mergers that may result in a substantial lessening of competition within any market in Singapore.

The application highlights that the Hanwha Group and DSME do not overlap in the supply of any goods or services in any market in Singapore. Hanwha, however, had operations in Singapore that include the broking and sale of petrochemical products and financial services offered in the city-state. DSME they note is building ships, such as LNG carriers and very large crude carriers, ordered by Singapore shipowners.

Hanwha says it anticipates some vertical integration between its businesses and DSME. They point to Hanwha’s manufacturing and supplying compressors used as components in LNG carriers as well as in the offshore business where DSME is building vessels as well as production and storage facilities. Hanwha Group is also engaged in manufacturing and supplying munitions and weapon systems mounted on surface vessels and submarines built by DSME for navies.

It was previously reported that Hanwha expects to complete the acquisition of the shares of DSME during the first quarter of 2023. The group will also have half the board seats for the shipbuilder and management control after completing the acquisition. South Korean officials have pointed to the importance of the transaction to strengthen DSME’s strategy and improve the investments and financial management of the shipbuilding to enhance its long-term competitive position.

The Competition and Consumer Commission has commenced a public comment period open until February 3 on the proposed transaction. Regulatory approvals are required from Korea’s Fair Trade Commission as well as the EU, Japan, China, Turkey, Vietnam, and UK competition authorities in addition to Singapore. The completion of the share acquisition also requires approval by Korea’s Minister of Trade, Industry and Energy for the sale of defense companies under the Defense Acquisition Act.