South Korean shipbuilding conglomerate Daewoo Shipbuilding and Marine Engineering (DSME) has shelved its plans to acquire STX France for the time being, according to DSME’s CEO Jung Sung-leep.
Speaking at a press conference on Thursday at the company’s headquarters Jung said that STX France is a solid company with a good outlook, especially in the context of DSME’s plans to enter cruise business.
“However, we’ve decided that pursuing an M&A deal with STX France is not appropriate at the moment. So, we have stopped any discussions about the deal,” Jung is quoted as saying by the local newspapers Business Korea.
The initial plan, proposed by state-run Korea Development Bank, was for DSME to acquire 66 percent stake in STX France.
KDB, which is STX Group’s main creditor and DSME’s largest shareholder, proposed the bid in an attempt of restructuring STX France and STX Finland.
Jung explained that an acquisition move would not be a right course of action as it might face opposition from labor unions in addition to the fact that the company disposes of limited liquidity reserves at the moment.
However, he added that DSME would not back down from the plans to enter the cruise ship market.
Industry data shows that DSME’s cash stood at 138.7 billion won in 2014, a considerable drop from 382.9 billion won recorded during the previous year.
According to Jung, cited by the newspapers, with respect to DSME’s restructuring, the company may resort to large-scale layoffs aimed at helping restore market confidence.
“Since our firm already made our workers more efficient through a debt workout program 15 years ago, we will not suddenly slash a lot of jobs as Hyundai Heavy Industries did,” Jung added.
World Maritime News Staff; Image: STX France