Hyundai Heavy fails to conduct due diligence on Daewoo Shipbuilding
Hyundai Heavy Industries Co. on Monday failed to conduct its first on-site inspection of Daewoo Shipbuilding & Marine Engineering Co.’s main shipyard here due to fierce union opposition, heralding a bumpy road ahead for the merger of the world’s top two shipbuilders.
The unionized workers at Daewoo Shipbuilding’s Okpo shipyard in Geoje, 350 kilometers south of Seoul, denied entry to a group of officials from Hyundai Heavy and the state-run Korea Development Bank. To prevent a violent clash between the union and the inspection team, 500 police officers were deployed to the shipyard.
In March, Hyundai Heavy signed a deal worth an estimated 2 trillion won ($1.6 billion) with KDB to buy Daewoo Shipbuilding.
The bank is the largest shareholder of Daewoo Shipbuilding, with a controlling 55.7 percent stake in the company.
Under the deal, Hyundai Heavy will be divided into a subholding company and a reorganized Hyundai Heavy Industries that will carry out its shipbuilding and offshore businesses. The shareholders of Hyundai Heavy approved the proposed split-up plan on Friday.
Daewoo Shipbuilding will be controlled under a subholding company named Korea Shipbuilding & Offshore Engineering.
Hyundai Heavy aims to complete the inspection by mid June.
Meanwhile, the unionized workers at Hyundai Heavy launched a full-scale strike, demanding a nullification of the company split-up. Hyundai Heavy union said it will take legal steps to reverse the shareholders’ decision.