Hyundai Heavy Industries Group, a major South Korean shipbuilding conglomerate, said Monday it has officially started the process to earn approval from anti-trust regulators for its proposed takeover of Daewoo Shipbuilding and Marine Engineering Co.
Hyundai Heavy said it has submitted a request for formal approval from South Korea's Fair Trade Commission (FTC) and has decided to make similar requests to antitrust watchdogs in Japan, China, Kazakhstan and the European Union. The shipbuilder said it will submit additional bids to other countries.
In March, Hyundai Heavy signed a formal deal, worth an estimated 2 trillion won (US$1.7 billion), with the state-run Korea Development Bank (KDB) to buy the smaller local shipbuilder. The bank is the largest shareholder of Daewoo, with a controlling 55.7-percent stake in the company.
Winning regulatory approval from domestic and foreign corporate regulators has been regarded as a key hurdle facing Hyundai Heavy's efforts to complete the merger with Daewoo Shipbuilding, since the tie-up of the two major shipbuilders could reshape the global shipbuilding landscape with their dominant market position.
South Korea's FTC will review Hyundai Heavy's deal for 30 days, though it can extend the review period to 90 days.
Hyundai Heavy said it has been discussing the matter with the EU regulators since April to prepare for approval of the merger and acquisition (M&A) deal. The company said the review process by the EU regulators will take months. The EU officials already said that approving any mergers between Hyundai Heavy and Daewoo depends on whether or not such a development hurts consumers.
"We've prepared thoroughly to meet the standards set by each antitrust regulator," the company said in a statement. "We'll do our best to complete the takeover of Daewoo Shipbuilding as quickly as possible."
Under the deal with the KDB, Hyundai Heavy last month was divided into a subholding company, Korea Shipbuilding & Offshore Engineering (KSOE) Co., and a reorganized Hyundai Heavy Industries, which carries out its shipbuilding and offshore business.
If the takeover process is completed, KSOE will have four shipbuilders under its wing -- Hyundai Heavy, Hyundai Samho Heavy Industries Co., Hyundai Mipo Dockyard Co. and Daewoo Shipbuilding.