이 기사는 2021년 12월 17일 08:01 thebell 에 표출된 기사입니다.

Hyundai Heavy Industries Group may drop its planned acquisition of Daewoo Shipbuilding & Marine Engineering, as the chances are dwindling for the European Union’s antitrust regulator to give the green light to the shipbuilding consolidation deal.

It has been almost three years since the deal was signed. In March 2019, Korea Shipbuilding & Offshore Engineering, Hyundai Heavy Industries Group’s intermediate holding company, agreed to acquire a controlling stake in the struggling smaller rival from the state-controlled Korea Development Bank (KDB).

If the deal falls through due to the EU’s antitrust concerns, KDB – which led the overall sale process three years ago – would be held responsible and have to start a process of finding a new buyer for Daewoo Shipbuilding all over again. In the meantime, the shipbuilder may further lose its competitiveness, with more money needed to keep the company in operation.

The Korea Fair Trade Commission (KFTC), the country’s competition watchdog, would also face criticism about its overly cautious attitude. Some defend the authority, saying it is practically difficult to get involved in decisions made by antitrust regulators in other countries. But KFTC would still not be free from being blamed for doing nothing.

Hyundai Heavy Industries Group has repeated its commitment to acquiring Daewoo Shipbuilding. However, a potential collapse of the deal would not be a big loss for the conglomerate compared with what Daewoo Shipbuilding is going to lose.

After regulatory approvals, Korea Shipbuilding is supposed to invest 1.5 trillion won ($1.27 billion) in Daewoo Shipbuilding through a capital increase as part of the deal. The cash is much needed for the ailing shipbuilder to pay existing debt and boost its liquidity.

Daewoo Shipbuilding has won shipbuilding orders that beat its annual goal this year, but this achievement will be reflected in earnings two to three years later. The company’s financial results this year have been adversely impacted by low orders for the past years and higher raw material and labor costs.

In contrast, the collapsed deal would likely have little impact on Hyundai Heavy Industries Group. While the conglomerate may have to scrap a plan to increase its market share by acquiring the competitor, it still maintains the top position in the market. It would also save the 1.5 trillion won, which would boost its cash position.

Additionally, Hyundai Heavy Industries Group completed its governance restructuring to launch the intermediate holding company Korea Shipbuilding as it prepared for the acquisition of Daewoo Shipbuilding. This helped the conglomerate enhance management efficiency. (Reporting by Eun-a Jo)