Hanwha revs up to acquire STX Heavy Industries, following DSME purchase

Hanwha Corp. is revving up to acquire STX Heavy Industries, which provides parts and technical support for marine engines, shipbuilding equipment, and more. The move follows Hanwha’s recently confirmed acquisition of Daewoo Shipbuilding & Marine Engineering Co. (DSME Co.)

Hanwha Group is conducting due diligence on STX after participating in a preliminary bid earlier this month, those familiar with the development told The Korea Economic Daily. 

The acquisition at stake is a 47.81% share owned by the South Korean private equity fund Pinetree Partners, worth around 100 billion won ($78.9 million). 

STX’s market capitalization stands at 1.98 trillion won ($1.56 billion) as of Monday’s close, up 7.04% on merger and acquisition (M&A) expectations. Around 4-5 Korean companies and private equity funds, including Korea Shipbuilding & Offshore Engineering, took part in the bid.

In the middle of this month, Hanwha signed an agreement with DSME to acquire the latter’s managerial rights by injecting 2 trillion won. When finalized, Hanwha will have a 49.3% stake in DMSE. 

STX is known for its diesel marine engine and dual fuel engine. In terms of low-speed diesel engines, the company is one of the three industry leaders including the Engine and Machinery department within the Hyundai Heavy Industries and HSD Engine. 

Its main clients include DSME and K Shipbuilding Co. 

Hanwha is aiming for complete vertical integration in the sector through the acquisition of DSME and the would-be acquisition of STX. 

As the shipbuilding industry is showing signs of recovery this year, STX’s financial structure has also improved. The company suffered hefty financial losses in 2018 and has been on a losing streak since then except for 2020. 

STX turned a corner in this year’s second quarter and posted profits in the third quarter as well.

Write to Chae-Yeon Kim at why29@hankyung.com
Jee Abbey Lee edited this article.