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SEOUL, Dec. 16 (Yonhap) -- Hanwha Group signed an agreement with Daewoo Shipbuilding & Marine Engineering Co. (DSME) on Friday to take over the embattled shipbuilder, officials said, paving the way for a smooth privatization after multiple unsuccessful attempts.
Under the deal, Hanwha Aerospace and five other Hanwha affiliates will acquire a 49.3 percent stake and managerial control in DSME through a 2 trillion-won rights offering by the shipbuilder, according to the companies and the state-run Korea Development Bank (KDB), DSME's biggest shareholder.
The KDB will still hold a 28.2 percent stake in DSME after the rights issue.
Due administrative and other approval processes by the local and foreign competition authorities will take place in the coming months.
Hanwha plans to finalize the acquisition in the first half of next year.
The deal is subject to approval by antitrust regulators in South Korea, the European Union, Japan, China, Singapore, Turkey, Vietnam and Britain, the shipbuilder said in a regulatory filing.
The signing of the contract came less than three months after the KDB picked Hanwha as the preferred bidder for the sale of the troubled shipyard.
The takeover, when completed, will put an end to the long drawn-out and botched state-led attempts to privatize DSME that began in the late 1990s in the wake of the collapse of DSME's parent firm, Daewoo Group.
The takeover will also boost Hanwha's drive for an expansion in defense and green energy, and efforts to streamline the business structure seen as preparation for leadership succession from Chairman Kim Seung-youn to his eldest son and the group's heir apparent, Kim Dong-kwan.
The KDB had left open chances for other potential buyers to make their bids in a so-called stalking horse offer, but no additional bid was submitted, officials said. Hanwha completed the due diligence on DSME late last month.
Market watchers say turning the loss-making shipyard around will be the main task for Hanwha. DSME, the world's No. 4 shipbuilder by order backlog, logged a cumulative net loss of 1.2 trillion won for the three quarters of this year.
Hanwha expects the profitability will improve significantly, backed by its strong overseas order backlog reaching $28.8 billion for the next three to four years.
The shipyard ended a debt rescheduling program in August 2001 after its parent Daewoo Group went bankrupt in the wake of the 1997 financial crisis.
But DSME has suffered the vicissitudes of repeated sale attempts that went south, as well as an accounting fraud scandal in 2015 that cost 4.2 trillion won in taxpayer money.
Hanwha made its first bid for DSME in 2008 for 6.32 trillion won, but the deal fell through amid the global financial crisis. Another bid by Hyundai Heavy Industries Group was thwarted after the antitrust arm of the European Union vetoed the move earlier this year after a nearly three-year review over potential market monopoly issues.
Hanwha, the seventh-largest conglomerate in South Korea, was founded in 1952 as an explosives maker and has diversified its businesses, ranging from chemicals, energy and defense to retail and financial. Its assets stood at 80.3 trillion won as of April and it has 91 affiliates under its wing.