South Korea's Daewoo signs deal for Hanwha Group stake

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South Korea's Daewoo signs deal for Hanwha Group stake

SEOUL South Korea's Daewoo Shipbuilding Marine Engineering Co Ltd has signed a tentative agreement on Monday for Hanwha Group to invest 2 trillion won $1.4 billion in return for 49.3 per cent stake and management rights in the shipbuilder, the companies and Daewoo's major stakeholder said.

The agreement signed with Hanwha Group affiliates, including Hanwha Aerospace, will only be valid if Hanwha is chosen after a period of being open to other bids, Daewoo said in a regulatory filing.

If Hanwha is chosen as the final bidder, the bank said that the stake of KDB is expected to shrink to 28.2 per cent.

A previous takeover attempt of Daewoo by rival Hyundai Heavy Industries in January was hit with an EU veto in January on concerns that the deal would have hurt competition, which led to the creation of the world's largest shipbuilder.

KDB is trying to sell Daewoo in order to tackle overcapacity in the sector.

In the first half of 2022, Daewoo Shipbuilding reported a 577 billion won operating loss, extending an operating loss of 1.7 trillion won in 2021, according to a company filing.

Kang Seog-hoon, chairman of KDB, told reporters on Monday that a strategic investor who does not operate in the shipbuilding industry is the only way to solve the problem.

Hanwha Group, South Korea's seventh largest conglomerate with 80 trillion dollars in assets, spans energy, defence and financial industries.