FTC Approves HD Korea Shipbuilding & Offshore Engineering’s Acquisition of STX Heavy Industries

FTC Approves HD Korea Shipbuilding & Offshore Engineering's Acquisition of STX Heavy Industries

Key Points

  • The FTC conditionally approved HD KSOE’s acquisition of STX Heavy Industries and KMCS.
  • The acquisition is expected to heighten competition between HD Hyundai and Hanwha in the ship engine market.
  • For three years, the merged entity has been banned from refusing crankshaft supplies to competitors and from excessive pricing.
  • Hanwha relies heavily on KMCS for crankshafts, complicating its competition with HD Hyundai.

The Fair Trade Commission (FTC) announced on Monday that it had granted conditional approval for HD Korea Shipbuilding & Offshore Engineering’s (KSOE) acquisition of STX Heavy Industries and its subsidiary, KM Crankshaft (KMCS). This approval follows a year after the HD Hyundai subsidiary signed a main contract with Pinetree Partners, a local private equity firm, to acquire a 35 percent stake in STX Heavy Industries.

This acquisition is poised to intensify the competition between HD Hyundai and Hanwha, especially in the ship engine market. According to the FTC, HD KSOE, which oversees HD Hyundai’s shipyards, aims to enhance its competitiveness in the global engine market by investing in eco-friendly engine production.

However, the FTC has placed certain restrictions on the merged entity for the next three years. The company is prohibited from refusing to supply crankshafts to its competitors and excessively increasing engine components’ prices. This measure is intended to prevent STX Heavy Industries from abusing its dominant position in the local crankshaft market.

“If Hanwha faces a setback in securing crankshafts, it could be impossible for the company to have fair competition with HD Hyundai in the ship engine market,” said Jeong Hee-eun, head of the FTC’s business trade and M&A bureau.

Hanwha, which acquired Daewoo Shipbuilding & Marine Engineering (DSME) in 2023 and HSD Engine in 2024, has emerged as a chief rival to HD Hyundai in the shipbuilding and ship engine markets. Hanwha Engine, formerly HSD Engine, currently holds around 20 percent of the local ship engine market, compared to HD KSOE’s 35 percent and STX Heavy Industries’ 5 percent.

Despite its competitive edge, Hanwha has sourced 80 percent of its crankshafts from Doosan Enerbility and the remaining 20 percent from KMCS. Due to an increase in Doosan’s production of nuclear power plant devices, Hanwha faces challenges in reducing its reliance on KMCS. Chinese crankshafts are not considered a viable alternative due to concerns over quality and price. The FTC indicated that the three-year restriction period could be extended if market circumstances require it.

HD Hyundai anticipates increased production capacity and expanded sales networks following the acquisition of STX Heavy Industries, which supplies products to Germany’s MAN Energy Solutions and China’s Xiamen Xiangyu. Conversely, Hanwha Engine aims to boost sales of methanol dual fuel and other eco-friendly engines, supplying to Samsung Heavy Industries, Shanghai Waigaoqiao Shipbuilding, and Hanwha Ocean, formerly DSME.

EDITORIAL TEAM
EDITORIAL TEAM
TechGolly editorial team led by Al Mahmud Al Mamun. He worked as an Editor-in-Chief at a world-leading professional research Magazine. Rasel Hossain and Enamul Kabir are supporting as Managing Editor. Our team is intercorporate with technologists, researchers, and technology writers. We have substantial knowledge and background in Information Technology (IT), Artificial Intelligence (AI), and Embedded Technology.

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