K Shipbuilding Co., a mid-sized shipbuilder which was previously called STX Offshore & Shipbuilding, has been put up for sale. The selling side expects a valuation of 1 trillion won, based on the market capitalization of its similarly-sized competitor, Daehan Shipbuilding. This is four times the 250 billion won that the UAMCO-KHI consortium paid when it acquired the shipbuilding company in 2021. The company, which once underwent court receivership, is signaling a splendid revival riding the shipbuilding industry boom.

According to the investment banking industry on July 8, the UAMCO-KHI consortium has sent requests for proposals (RFPs) to major accounting firms for the selection of a lead manager for the sale. They plan to select a lead manager by early next week at the latest. The sale target is the consortium’s 99.58% stake in K Shipbuilding.

K Shipbuilding was once the world’s fourth-largest shipyard based on order backlog. However, following the 2008 financial crisis, it faced a liquidity crisis and spent over a decade under creditor management and court receivership.

Under new ownership, K Shipbuilding achieved a dramatic turnaround. Last year, it recorded sales of 934.7 billion won and an operating profit of 11.2 billion won, returning to profitability for the first time in eight years. In the first quarter of this year, it continued its growth trajectory with sales of 285.6 billion won and an operating profit of 12.7 billion won. This performance was largely due to increased prices for its main product, medium-sized petrochemical carriers (PC ships).

The selling side’s confidence stems from the market value of its competitor Daehan Shipbuilding. Daehan Shipbuilding recently applied for a preliminary review for KOSPI listing, presenting a corporate value exceeding 1 trillion won. Its main justification is stable performance specializing in Aframax crude oil carriers, achieving sales of 1.0746 trillion won and an operating profit of 158.2 billion won last year. Consequently, K Shipbuilding’s expected sale price has been adjusted upward from the initial 500 billion won to around 1 trillion won.

Potential acquisition candidates include Hanwha Group, which owns Hanwha Ocean, and HD Hyundai Group, which has HD Korea Shipbuilding & Offshore Engineering under its umbrella. These companies could benefit from acquiring K Shipbuilding by securing additional docks and diversifying their ship types.
Source: Business Korea