Philly Shipyard in Philadelphia, Pennsylvania (Courtesy of Hanwha Group)
South Korean chemicals-to-defense conglomerate Hanwha has signed a $100 million deal to acquire a 100% stake in Philly Shipyard Inc., becoming the first Korean company to enter the US shipbuilding industry.
The acquisition involves the Korean conglomerate’s two defense-related affiliates – Hanwha Systems Co. and Hanwha Ocean Co.
Hanwha Systems is an aerospace and defense specialist.
Hanwha Ocean, formerly Daewoo Shipbuilding & Marine Engineering Co. (DSME), is one of the world’s major container shipbuilders. Hanwha is also the only Korean company that has built submarines for the country’s Navy since 1987.
Hanwha signed a deal on Thursday to take over the shipyard from Philly’s largest shareholder, Aker Capital, an Oso-based Norwegian energy investment company.
Philly Shipyard in Philadelphia, Pennsylvania (Courtesy of Hanwha Group)
Officials said the deal is expected to close in the fourth quarter of this year after regulatory approval, including one from CFIUS or the Committee of Foreign Investment in the US.
Hanwha has been tipped as the potential buyer for some time amid its intensifying competition with crosstown rival HD Hyundai Heavy Industries, which in April signed a memorandum of understanding on specialty ship maintenance and repair with Philly Shipyard.
HD Hyundai is expected to withdraw its MOU agreement with Philly following the Hanwha-Philly deal. However, HD Hyundai is widely expected to seek a business partnership with another US shipyard or embark on a takeover.
HANWHA’S BRIDGEHEAD TO ENTER US SHIP MRO MARKET
Hanwha’s acquisition of Philly Shipyard will serve as its bridgehead to enter the US ship maintenance, repair and operations (MRO) market.
Based in Philadelphia, Pennsylvania, Philly Shipyard sits on what was once the site of a US Navy facility. It was founded in 1997, best known for its work producing container vessels and tankers.
The company, which owns the largest shipbuilding dockyard in the US, has since built about half the Jones Act-compliant commercial ships, including chemical product carriers.
It has also constructed training vessels for MARAD, or the US Maritime Administration, as well as special-purpose ships such as maritime wind power equipment installation boats for the US government
Hanwha Group said it plans to leverage Philly Shipyard to tap into the US shipbuilding, maintenance and repair market at both the government and commercial levels.
Hanwha Systems, a defense specialist, and shipbuilder Hanwha Ocean aim to collaborate with its US partners to develop merchant ships with autonomous sailing capabilities.
The two Korean companies’ advanced technologies in unmanned maritime systems, naval radars and sensors could be integrated into commercial vessels and special-purpose ships such as unmanned underwater vehicles, according to Hanwha Group.
HANWHA’S OVERSEAS EXPANSION
Hanwha Group is seeking to expand its presence in the global market.
Earlier this year, Hanwha Ocean made a play to purchase Australian shipbuilder Austal, which would include its Alabama-based facilities, but the deal was rejected — at least for the time being, with both parties indicating they might reconsider down the road.
Hanwha Ocean is also among the five short-listed contenders for an A$11 billion (US$7.3 billion) Australian deal to build 11 advanced frigates – a competition involving HD Hyundai Heavy and three other bidders – Japan’s Mitsubishi Heavy Industries (MHI), Spain’s Navantia and Germany’s KMS.
“We aim to enhance our presence globally, including the US, the Middle East, Southeast Asia and Europe,” said Hanwha Systems Chief Executive Eoh Sung-chul.
By Hyeon-woo Oh
ohw@hankyung.com
In-Soo Nam edited this article.
