November 23, 2024

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An aerial view of the Philly Shipyard in Philadelphia, Pennsylvania. (Hanwha Group)

Hanwha Group, South Korea’s defense-to-energy conglomerate, is looking to expand its shipbuilding and maritime businesses in the United States as it appears to be contemplating a second American shipyard acquisition.

Mike Smith, who was appointed as the CEO of Hanwha Defense USA in August, a US subsidiary of Hanwha Aerospace, said in Washington last week that Hanwha is “not done” when asked whether Hanwha’s purchase of Philly Shipyard was a one-time deal.

Hanwha Group announced the acquisition of the shipyard in Philadelphia for $100 million in June, becoming the first Korean entity to enter the US local shipbuilding industry.

“Hanwha sees maritime as an attractive market where its expertise in ship design, shipbuilding and MRO (maintenance, repair and operations) would be highly relevant,” Mike told The Korea Herald in a written interview Tuesday.

“From a strategic standpoint, the greatest need is on the West Coast. However, we will need to be selective and opportunistic with any subsequent acquisitions. We need to see what is actionable and strategically suitable.”

The CEO did not disclose any names regarding potential candidates for a takeover on the West Coast. The comments by the CEO of Hanwha Defense USA are in line with the US government's push to revive its shipbuilding and ship repair capacity.

“One thing to keep in mind is the need to extend shipbuilding beyond traditional shipyards,” he said.

“We need to expand our perspective and think about shipbuilding in new and creative ways.”

After taking over Daewoo Shipbuilding and Marine Engineering and rebranding it into Hanwha Ocean in April and May last year, Hanwha Group has been actively investing in expanding its shipbuilding and maritime businesses.

In August, Hanwha Ocean clinched Korea’s first warship maintenance project from the US Navy to open up the market for the country’s maritime defense industry. By landing a depot maintenance contract for the US Navy’s 40,000-ton-class auxiliary ship, the company paved its way into the US Navy’s MRO market, estimated at 20 trillion won ($14.7 billion) per year.

Hanwha tried to acquire Australian shipbuilder Austal for over a year and carried out negotiations but eventually decided to stop pursuing the acquisition last month as the two sides failed to reach an agreement.

Despite the fallout, the conglomerate said it will continue to search for new business opportunities across the world including Australia.

In the same month, Hanwha announced a plan to acquire Dyna-Mac, an offshore plants manufacturer in Singapore, at SG$0.6 a share. Hanwha Aerospace and Hanwha Ocean invested 116 billion won ($85 million) to secure a 25.4 percent stake in the Singaporean company in May this year.

Hanwha on Monday raised its offer for the remaining stake in Dyna-Mac to S$0.67 per share after Dyna-Mac’s single largest shareholder -- the estate of founder Desmond Lim -- said it did not find the Korean conglomerate’s offer compelling.

Hanwha said taking control of Dyna-Mac would improve productivity and cost efficiency, and strengthen engineering competencies in collaboration with Hanwha Ocean as the global demand for floating offshore plants is projected to rise.

“Based on our world-class shipbuilding and warship-building capabilities, Hanwha Ocean will expand synergy in not only the defense sector but also energy areas and use the Philly Shipyard as an opportunity to generate sales in the US and become a global partner,” said Hanwha Ocean.

By Kan Hyeong-woo (hwkan@heraldcorp.com)