South Korea's STX Group said on Monday it was more than doubling its stake in No 1 European ship maker Aker Yards, to 88.4 percent through a $635.5 million tender offer as it seeks to grow its portfolio of businesses. The acquisition of Aker Yards gives STX Group, a shipbuilding-to-energy conglomerate, high-end cruise ship and specialised offshore vessel businesses.
The group's shipbuilding unit STX Shipbuilding ranks No 6 among world-wide shipyards and has strength in bulk carriers and container ships. Analysts were skeptical about the deal's benefits, however, with Aker Yards suffering weak profitability and its cruise business particularily vulnerable to the economic downturn.
The buyout STX Group cost about 1.4 trillion won ($1.34 billion) altogether, for the tender offer and previous share purchases, according to the group. "The acquisition may be necessary for STX to grow its portfolio to include more lucrative, value-added ships, but new businesses like cruise ships don't have strong prospects at the moment," said Joey Lee, an analyst at Goodmorning Shinhan Securities. "Investors need to be cautious until Aker Yards see an improvement in its bottom line." STX said in a statement it amassed 54.51 million shares in the Norwegian company in the 63 crowns-per-share tender offer as of August 18, securing an additional 48 percent stake.
STX Shipbuilding had raised its stake in Aker Yards to 40.4 percent in June, which triggered a mandatory offer to buy out other minority owners. Funding will come from STX Shipbuilding's cash reserves and investors, it added. Shares in STX Shipbuilding, worth $1.6 billion in the market, were up 1.09 percent at 23,200 won by 0426 GMT, outperforming the wider market's 0.79 percent loss. Aker Yards shares last traded at 62.5 crowns.
STX Shipbuilding competes with bigger rivals in South Korea, which is home to the world's top shipbuilders - industry leader Hyundai Heavy Industries Co, No 2 Samsung Heavy Industries Co, and third-placed Daewoo Shipbuilding and Marine Engineering Co.
It hopes Aker Yards's advanced technologies in cruise ships, ice breakers and other specialised vessels would help it better fight those giants and become a global player.
Following the acquisition, STX Group plans to rename the company STX Europe ASA and make the main headquarters a specialised offshore vessel manufacturing base. Aker Yards' French unit, which will be renamed STX France Cruise SA, will focus on the cruise and defence businesses.
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