By Lee Hyo-sik
Daewoo Shipbuilding & Marine Engineering (DSME) said Tuesday that it is considering acquiring STX France, a European subsidiary of struggling STX Offshore & Shipbuilding, which manufactures cruise ships.
The world’s second-largest shipbuilder said its main stakeholder, Korea Development Bank (KDB), had asked it to look into the possibility of taking over the STX France shipyard in Saint-Nazaire, northwestern France.
“We just began the study and, at this point, it is too early to say what we will do,” a DSME spokesman said. “The review process may gain speed after our new CEO takes office later this month.”
The news comes at a time when Jung Sung-leep, former CEO of STX Offshore & Shipbuilding, is set to become the new DSME chief. Jung was appointed to head the shipbuilder at the board of directors’ meeting in early April. On May 29, the company will hold a shareholders’ meeting to endorse Jung’s appointment.
KDB, which holds a 31.5 percent stake in DSME, has sought to dispose of STX Europe as part of a restructuring program to get STX Offshore & Shipbuilding back on track. STX Europe has two subsidiaries _ STX France and STX Finland.
KDB holds a 48.15 percent stake in STX, which owns a 66.66 percent stake in STX France through STX Europe. The remaining 33.34 percent is held by the French government, who has been pressing KDB to sell the French shipyard as soon as possible.
Initially, KDB had sought to complete the sale in 2014, but has been unable to find a buyer for STX France.
In contrast, STX Finland will soon be taken over by a German company.
Some speculate that KDB may be pushing Daewoo to acquire STX France or use the shipbuilder as a catalyst to invigorate the sales procedure by encouraging other shipbuilders to take part in a bid.
However, KDB flatly denied such speculation, saying that it is not forcing DSME to take over STX France.
“We own both DSME and STX, so there is no reason whatsoever for us to force the former to acquire the latter,” a KDB spokesman said. “What we want to do is to see whether DSME can generate synergy from acquiring STX France. If that is the case and DSME wants to buy it, we will let the shipbuilder do so. But if it doesn’t want to, we will not force it to.”
Many say that the shipbuilder will not likely take over STX France, given the prolonged global industry slump.
“Considering how things are in the international shipbuilding market, Daewoo will not likely acquire STX France,” said an industry official familiar with the matter, who declined to be named. “Cruise and other leisure ships are more vulnerable to changes in economic conditions than container and other commercial vessels. I don’t think DSME has enough cash or intention to acquire STX France.”
Daewoo and other local shipbuilders’ bottom lines have deteriorated because of fierce competition for contracts amid a sluggish global market. To secure orders, they had to build ships and offshore plants at lower prices, which chipped away at its profitability.
Chinese shipbuilders in particular have caught up with Korean manufacturers, making it harder for local players to win orders abroad. Falling oil prices have also slashed demand for oil tankers and other types of ships.