Korea's HD KSOE to buy 35% stake in marine engine maker STX

HD Korea Shipbuilding & Offshore Engineering Co. (KSOE) is slated to acquire STX Heavy Industries Co. to make large engines for small-to-mid-sized carriers, the shipbuilder said in a regulatory filing on Monday.

KSOE, the intermediate shipbuilding holding firm of South Korea’s HD Hyundai Co., said it has signed a deal to buy 6.5 million shares in STX Heavy from Seoul-based Pine Tree Partners LLC. The country’s major shipbuilder will also acquire 5.5 million new shares in STX Heavy, securing a combined 35% stake in the marine engine maker at 81.3 billion won ($65.1 million).

KSOE joined the race to acquire STX Heavy last December, alongside local engine maker HSD Engine Co. and an undisclosed overseas company.

KSOE is planning to manufacture large engines for small-to-mid-sized ships. It exports HiMSEN, mid-sized engines for large ships, to about 40 countries. The company and its Saudi Arabian joint venture began building a plant in the Middle East country in June to start overseas manufacturing of the engines. 

Engines typically account for 5-10% of ships' construction costs.

STX Heavy specializes in manufacturing low-speed marine diesel engines, as well as dual fuel engines for liquefied natural gas carriers. The company produces engines through licenses from Germany’s MAN Energy Solutions SE.

KSOE will leave STX Heavy’s management independent and support its eco-friendly marine engine technology development, in a positive outlook for LNG dual fuel engines for small-to-mid-sized carriers.

The shipbuilder said it will also strengthen each production line of STX Heavy to enhance manufacturing efficiency, step up the localization of major engine parts as well as boost its share in overseas markets such as China.

Write to Hyung-Kyu Kim at khk@hankyung.com


Jihyun Kim edited this article.