The trade union of Daewoo Shipbuilding & Marine Engineering (DSME) has vowed to go all-out to prevent Hyundai Heavy Industries (HHI) from taking over the shipbuilder, whose majority owner and main creditor is the Korea Development Bank (KDB).
In January, HHI signed a preliminary deal to acquire its rival DSME, signing a contract with the state-backed KDB, which has a 55.7 percent stake in the company, valued at an estimated $2 billion.
Fearing possible job cuts, the union immediately expressed its opposition and a vast majority of its members supported calling a strike. A union leader said that the strike was now inevitable in consideration of how the KDB has dealt with the DSME sale.
“Because HHI itself is a shipbuilder, the acquisition will lead to massive layoffs. We cannot accept this,” said Ha Seung-hyun, who is in charge of the DSME union’s general affairs division.
“We have yet to decide when and how to go on strike. We will make a decision depending on how the KDB and HHI react. But one thing is certain that we will surely have a strike.”
He especially took issue with the way the KDB picked HHI to sign the preliminary contract with.
“Even top executives at DSME were kept in the dark over the discussions between the KDB and HHI before the bank announced it just ahead of the Lunar New Year holiday. That is a big problem,” Ha said.
“We urge the KDB to pursue proper procedures to find new candidates to purchase DSME. In addition, the timing should not be now but sometime in the future. As the global shipbuilding business is showing signs of a recovery, the DSME sale should be delayed to secure a better buyer.”
Another obstacle for HHI is that it has to get the go-ahead not only from Korean regulators but also those of China and Japan.
Typically, a merger and acquisition (M&A) contract is subject to approval by the anti-trust agency of a certain country. But in the case of big-sized transactions that greatly affect overseas consumers, other nations also have a say.
In the case of the shipbuilding industry, HHI will have to get the nod from China, Japan, the United States and the European Union, which buys many vessels from both HHI and DSME.