SEOUL --- Hyundai Heavy Industries Co. on Friday signed a formal deal with the state-run Korea Development Bank (KDB) to buy its smaller local rival Daewoo Shipbuilding & Marine Engineering Co., heralding the world's largest shipbuilding group with a some 20 percent market share.
Hyundai Heavy became the sole bidder for Daewoo Shipbuilding after another local shipyard, Samsung Heavy Industries Co., turned down an offer to bid for Daewoo Shipbuilding.
KDB, the largest shareholder with a 55.7 percent stake in Daewoo Shipbuilding, signed a preliminary deal with Hyundai Heavy last month to sell its stake.
Under the deal estimated at over 2 trillion won (US$1.78 billion), KDB will hand over its Daewoo Shipbuilding stocks to an entity to be set up later by Hyundai Heavy, in return for 1.25 trillion won worth of stocks to be sold later by the entity.
Hyundai Heavy will also chip in a total of 2.5 trillion won in the entity, which will be used to repay Daewoo Shipbuilding's debts, according to Hyundai Heavy.
Hyundai Heavy said the entity will hold about a 68 percent stake in Daewoo Shipbuilding, with KDB becoming the second-largest shareholder.
"The deal is part of efforts to help boost the competitiveness of our country's shipbuilding industry," KDB chairman Lee Dong-gull said during a press conference. "Eventually, the deal is also aimed at providing stable job offerings and boosting the local economy."
Hyundai Heavy will hold a shareholder meeting to approve a spin-off plan and will set up an entity to receive Daewoo Shipbuilding stocks from KDB, after the regulatory process is completed. (end of excerpt)
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