Hyundai Heavy Industries (HHI) Group and Korea Development Bank (KDB) have signed a definitive agreement for the acquisition of Daewoo Shipbuilding & Marine Engineering (DSME).

The new agreement builds on the earlier deal signed between HHI and KDB in January.

KDB has agreed to make a contribution-in-kind to a new company tentatively named Korea Shipbuilding & Offshore Engineering (KSOE) by transferring its shares in DSME against an equity stake in KSOE.

KSOE will be established as a sub-holding company spun off from HHI and will control all shipping activities of the group.

HHI Holdings vice-chairman and CEO Kwon Oh-gap said: “The decision to welcome DSME to the HHI Group is deeply rooted in our belief that it is a mission given to our group as the trailblazer and long-standing leader of Korea’s shipbuilding sector to take the initiative in elevating the industry to new heights.”

“The acquisition was a part of their efforts to support the revival of the shipbuilding industry and assist in encouraging local employment and economy.”

At the signing ceremony of the definitive agreement, HHI and KDB also confirmed the employment security of DSME workers and continued collaboration with its current business partners.

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The current management structure will also be retained.

The acquisition was part of their efforts to support the revival of the shipbuilding industry and assist in encouraging local employment and economy, the companies said.

Kwon Oh-gap added: “HHI Group’s post-acquisition strategy is to have its four shipyards, which would now include DSME as the latest addition to the group’s portfolio of shipbuilding business, focused on design, manufacturing and sales activities, which will be controlled by KSOE specialised in R&D and engineering, with a view to taking HHI Group’s competitiveness to the next level.”