Hanwha Ocean making $450 million play for Singaporean FPSO player

Given the uptick in demand for floating production facilities, South Korea’s shipbuilder Hanwha Ocean has put the wheels in motion to expand its capacity in this arena by taking full control over Singapore-based offshore builder Dyna-Mac which specializes in manufacturing marine plant topside structures for floating production, storage, and offloading (FPSO) and floating liquefied natural gas (FLNG) units.

In partnership with its subsidiary Hanwha Aerospace, the South Korean shipbuilder intends to make a voluntary conditional cash offer to secure management control of the Singaporean firm, after investing KRW 116 billion, or approximately $86.9 billion, in May to buy a 25.4% stake in the company.

The offer announcement from September 11, made by the United Overseas Bank on behalf of the South Korean shipbuilder, proposes S$0.60, or around $0.46, in cash per share for all the issued and paid-up ordinary shares in the capital of Dyna-Mac, other than shares already owned, controlled, or agreed to be acquired by Hanwha.

The bid will be made through a local special purpose company (SPC) in Singapore, with the two firms funding up to approximately S$ 586 million, or around $450 million, if all shares are acquired.

According to Hanwha, its offer is based on various aspects that could affect the Singaporean firm’s business outlook, including growth prospects and order book, geopolitical tensions, macroeconomic uncertainties, volatility in oil prices, and a global trend of switching to cleaner energy sources.

Furthermore, despite the pause in large floating production orders in Q1 2024, global demand for such units is expected to rise, including a forecast of 83 FPSO orders by 2030. Thus, this acquisition would help Hanwha secure its spot in this growing market.

In response to the offer, on September 18, Dyna-Mac appointed ZICO Capital as the independent financial adviser (IFA) to directors considered independent regarding the recommendation to be given to shareholders about the offer. A document containing ZICO Capital’s advice and the directors’ recommendation on the offer is expected to follow within 14 days from the date of the offer document. 

The South Korean shipbuilding major recently received approval from DNV for its innovative rotor sail technology. The approval also covers the installation of the rotor sail in hazardous zones onboard vessels, such as tankers carrying dangerous cargo, which DNV says makes it the first such certification in South Korea.