The South Korean news agency Yonhap has reported that the EU’s antitrust review of the proposed merger of Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering continues to be on hold after more than a year of delays and 18 months since the EU stated the proposed transaction required an in-depth investigation.
The news of the continued delays comes as the companies face their latest deadline by the end of June to complete the merger.
The merger between Korea’s two large shipbuilding was first announced in March 2019 with terms of the transaction set at the end of the year. At the time of the announcement, the companies said that six regulatory bodies would need to review the proposed transaction which would create the world’s largest shipbuilder representing as much as a fifth of the market. Now it appears the EU antitrust review on hold again.
Kazakhstan was the first to approve the merger, followed by Singapore and later China. In addition to the EU, both Japan and South Korea need to approve the merger, but sources have believed that those countries were waiting for the approval from the Europeans.
The European Commission announced in late 2019 that it had opened an in-depth investigation based on its concerns that the merger may reduce competition in various global cargo shipbuilding markets. Based on delays gathering information, in part due to limitations as a result of the coronavirus, the EU has on several occasions suspended the review process. Originally expected to be completed by September 2020, Yonhap is reporting that the review has not progressed since the EU initiated the last pause in July 2020.
To aid in the regulatory review, the Hyundai Group undertook several steps to restructure the operations and management of the companies. Korea Shipbuilding & Offshore Engineering Co. was set up as the holding company that would oversee strategy and acquisitions while Hyundai Heavy Industries would focus on the construction of ships at its three shipyards, Hyundai Heavy Industries, Hyundai Mipo Dockyard, and Hyundai Samho Heavy Industries. DSME would remind a separate operating company.
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