HD Korea Shipbuilding to acquire STX Heavy Industries
HD Korea Shipbuilding & Offshore Engineering, the shipbuilding unit under HD Hyundai, said Tuesday it will acquire STX Heavy Industries, a Korea-based marine diesel engine manufacturer in a 81.3 billion won ($63.5 million) deal.
The company said it signed a contract with the private equity firm Pinetree Partners to purchase its 6.52 million shares in the engine manufacturer and an additional 5.36 million newly issued shares. The shipbuilder will become the largest shareholder holding a 35 percent stake.
HD Korea Shipbuilding & Offshore Engineering plans to secure production capability in small and midsized engines for vessels in addition to its expertise in manufacturing engine for large container ships.
In March, HD Hyundai Heavy Industries, a subsidiary of HD Korea Shipbuilding & Offshore Engineering, set a record in the global shipbuilding industry, posting more than 200 million horsepower in accumulative engine production for large vessels.
The shipbuilder plans to back up STX Heavy Industries’ management, independent of the new parent company. It also aims to ramp up STX’s production capacity by ramping up development of eco-friendly engine technology and setting up more advanced production lines for diesel and dual fuel engines.
STX Heavy Industries’ turbocharger technology will be helpful for HD Korea Shipbuilding & Offshore Engineering in accelerating local production of key engine parts and expanding its presence in global markets including China, the company said. Turbocharger is an integral part of a marine engine which reuses the exhaust gases in order to increase the overall efficiency of the engine.
“Combining HD Hyundai Heavy Industries’ engine technology to STX Heavy Industries’ eco-friendly engine technology will make us gain momentum in the fast-growing demand for clean transportation,” said an official from HD Korea Shipbuilding & Offshore Engineering.
Last year, Pinetree Partners put STX Heavy Industries up for sale. HD Korea Shipbuilding & Offshore Engineering and Hanwha Ocean, formerly known as Daewoo Shipbuilding & Marine Engineering, participated in the preliminary bidding. But Hanwha dropped out from the deal and acquired HSD Engine, leaving HD Korea Shipbuilding as the sole bidder for the engine manufacturer.
Following the announcement, HD Korea Shipbuilding & Offshore Engineering’s stock price increased by 0.97 percent to 124,500 won at the closing bell from the previous day.
In the second quarter this year, the company turned a profit, logging 71.2 billion won in operating profit, while its sales revenue jumped 30.2 percent to 5.45 trillion won compared to a year earlier. Its key subsidiary, HD Hyundai Heavy Industries, also turned a profit of 24.1 billion won and logged 3.6 trillion won in sales, a 41.5 percent jump in the cited period.
Source: The Korea Herald