Unionists worry about conditional approval from EU
In this January, the Korea Development Bank announced that it signed a $1.7 billion deal with Hyundai Heavy Industries (HHI) to sell its 55.7-percent stake in Daewoo Shipbuilding & Marine Engineering (DSME).
After the contract involving the world’s two leading shipyards, unionists of cash-strapped DSME have opposed the acquisition as they worried about job security.
In early March, they set up tents in front of the state-run bank and the head office of DSME, both in Seoul, to stop the high-profile M&A that will give rise to a mega-sized shipbuilder.
June 11 marked the 100th day after they started the “tent protest,” which is expected to continue for the time being according to Bae Jung-ho, one of union leaders.
“After having a meeting this month, HHI shareholders are scheduled to visit out shipyards in Geojae by this week. After the deadline, we will remove the tent in front of DSME but will maintain one at the Korea Development Bank,” Bae said.
“We are determined to fight to the last minute to block HHI from taking over DSME.”
Asked whether the DSME union would accept the M&A in case HHI promises job security, Bae came up with negative responses.
“We cannot believe such kinds of pledges. In case the business gets worse, HHI would not keep the promises. The best way for DSME and the country’s shipbuilding industry is to stop the consolidation between HHI and DSME,” he said.
Geojae is located in South Gyeongsang Province, some 330 kilometers south of Seoul.
Even if HHI shareholders manage to go through due diligence, there is another roadblock of anti-monopoly reviews both at home and abroad.
In particular, HHI needs to get the green light from China, Japan, the United States, and the European Union, which purchase lots of ships from HHI and DSME.
Overall, the two companies combine to explain just higher than 20 percent market share of the global order book. But they account for more than 80 percent of the market in LNG carriers.
Asked about the reviews of anti-trust agencies, Bae said that the trade union most worry about European Union.
“Basically, we think that China would give a nod because it also wants to consolidate its shipyards. Japan will not approve deal, but it will not have a big impact,” Bae said.
“What we are concerned most is the possibility that the European Union will give a conditional approval. What if it requires HHI to reduce capacity of LNG carriers to get the go-ahead. That means that HHI and DSME should reduce workforce, the worst scenario for us.”