The world’s second-largest shipbuilder has split itself into four companies, a move that would facilitate a potential sale of some of the businesses.
Hyundai Heavy Industries Co. started trading as four entities Wednesday as the conglomerate tries to insulate the group from a financial crisis at any one of its divisions.
The breakup splits the operations into businesses focused on shipbuilding and offshore projects, electric machinery, construction equipment, and industrial robots. The combined market value of the four companies now is about 16.8 trillion won ($14.8 billion), versus 12.5 trillion won when trading in Hyundai Heavy was halted in March.
“Now, each division is being listed separately,” said Paul Choi, head of research for CLSA Securities Korea Ltd. “You can do funding or sell in the market.”
The dismantling of Ulsan, South Korea-based Hyundai Heavy is the latest restructuring round in the country’s ailing shipbuilding industry, home to the world’s top three vessel-manufacturers. The shipbuilders have cut more than 20,000 jobs and sold assets as orders dwindled amid excess capacity and depressed crude oil prices in the past three years that led clients to curtail spending on offshore projects.
Hyundai Robotics Co., Hyundai Electric & Energy Systems Co. and Hyundai Construction Equipment Co. are the three other companies formed after the split.
Shares of Hyundai Heavy rose 15 percent from the adjusted last-closing level to 180,500 won in Seoul. Hyundai Robotics ended the day at 390,000 won, Hyundai Construction at 240,000 won and Hyundai Electric at 280,000 won, according to data compiled by Bloomberg.
Last month, Daewoo Shipbuilding & Marine Engineering Co., the largest shipbuilder based on its orderbook, averted a payment crisis after bondholders agreed to bail out the company. Daewoo, Hyundai Heavy and Samsung Heavy Industries Co. are the world’s top three shipbuilders.
“We will focus on growth opportunities for the individual companies,” a Hyundai Heavy group spokesman said in response to queries on a possible sale of the spun-off entities. “We will invest for future growth of these units to meet our goal of each becoming a top-five company in their sectors.”
Hyundai Heavy was set up in the 1970s, when its first ships were built at a dockyard in a seaside village on South Korea’s eastern coast. The new Hyundai Heavy, based on the spun-off structure, had sales of 23.7 trillion won last year, accounting for 60 percent of the group’s total before the breakup.