A merger agreement announced in September between South Korea’s Samsung Heavy Industries and Samsung Engineering has fallen through.
According to The Korea Times, one of South Korea’s largest newspapers, Samsung Heavy Industries has cancelled the deal as shareholders opposing the merger requested the companies buys back their shares.
However, according to the paper, the companies opted against the merger as the price they would have to pay the shareholders requesting a buy-back was deemed too high.
“If both companies want to become one, they have to pay combined 1.63 trillion won ($1.47 billion) for the share purchase. The amount is much larger than expected, so we decided not to go ahead with the merger,” The Korea Times has quoted a joint statement by the two companies.
To remind, the companies had hoped to create a “world-class total solution provider for shipbuilding and onshore and offshore services.”
Through the merger, Samsung Heavy Industries was aiming at obtaining engineering, procurement, and project management capabilities, which are the strengths of Samsung Engineering, and establish a stable foundation for the growth of its offshore plant business.
On the other hand, Samsung Engineering, focused on onshore oil and gas plants, would be able to diversify into high value-added projects such as onshore LNG and offshore plants by securing Samsung Heavy Industries’ offshore plant construction abilities.