Taehwa Group is shifting its focus to the shipbuilding equipment business, with the firm selected as preferred bidder for Shinhan Heavy Industries, a subsidiary of Daewoo Shipbuilding & Marine Engineering, sources said on Thursday (February 25).
The acquisition price is reportedly in the high-100 billion won ($88 million) range. Taehwa Group has partnered with NH Private Equity (PE) and Opus Private Equity for the deal, marking the company’s first investment with PE firms.
Founded in 1982, Taehwa Group specializes in manufacturing motors, especially for home appliances and automobiles, and is also involved in the shipbuilding equipment and press punching businesses.
The group has seldom appeared in mergers and acquisitions markets, but changed its strategy last year by selling its core company BMC and Tamas to SV Investment for around 320 billion won. Some businesses were offloaded, and it joined the race for Shinhan Heavy Industries earlier this year.
Taehwa Group chairman Choi Won-ho reportedly wants to shift the group’s focus to the shipbuilding equipment business. Choi owns 100% of TMC, Taehwa’s existing shipbuilding equipment company, which he manages directly.
TMC manufactures ships and boats, shipbuilding equipment and parts for gas storage tanks, with clients that include Hyundai Heavy Industries and Samsung Heavy Industries. The company posted revenue of 38 billion won and operating income of 2.2 billion won in 2019.
Taehwa Group has decided to focus on shipbuilding equipment as the shipbuilding industry is showing signs of recovery. It is likely to be responsible for managing Shinhan Heavy Industries, while NH PE and Opus PE plan to support the group.
Some market insiders expect Taehwa Group to make more acquisitions to expand its shipbuilding equipment business once it has both Shinhan Heavy Industries and TMC under its umbrella. (Reporting by Se-hun Jo)