On April 10, it was revealed that HD Hyundai and Hanwha Group are considering a proposal to acquire the Subic Shipyard in the Philippines, according to Korean media BusinessKorea.
This development marks a significant move in the strategic expansion of South Korean companies into Southeast Asia’s shipbuilding and defense sectors. The Subic Shipyard, originally constructed by Hanjin Heavy Industries between 2006 and 2009, has grown into one of the world’s top five shipyards. Following Hanjin’s restructuring in 2019, the shipyard was acquired by U.S. private equity firm Cerberus and is currently leased by the Philippine Navy for ship repairs.
The interest from HD Hyundai and Hanwha comes amid their ongoing efforts to expand their global footprint in maritime operations. An industry insider noted, “After the proposal for the Philippine shipyard, the offer to acquire Subic Shipyard was also extended to the two companies.” This acquisition could position both firms strategically within Southeast Asia, leveraging Subic Bay’s historical significance as a former U.S. naval base until 1992.
HD Hyundai has been actively engaging with the U.S. Department of Defense to acquire shipyards in Southeast Asia for maintenance, repair, and overhaul (MRO) activities and ship block production. A representative from a global private equity firm stated, “HD Hyundai is communicating with the U.S. Department of Defense and plans to acquire excellent shipyards in Southeast Asia to use them as MRO and ship block production bases.” This aligns with HD Hyundai’s broader strategy to strengthen its eco-friendly initiatives and enhance its engine production capabilities through recent financial maneuvers, including issuing 600 billion won in exchangeable bonds.
Meanwhile, Hanwha Ocean has already made significant strides by acquiring a Philippine shipyard earlier this year and completing an MRO project for the U.S. Navy’s logistics support vessel ‘Wally Schirra’. This achievement marks a milestone as it represents the first MRO business for U.S. naval vessels by a domestic South Korean shipbuilder. Hanwha has announced plans to invest 2 trillion 400 billion won in Hanwha Aerospace for overseas defense and shipbuilding acquisitions, underscoring its aggressive growth strategy through mergers and acquisitions.
The contrasting strategies of these two South Korean conglomerates highlight their distinct corporate cultures. As another industry insider observed, “Hanwha has grown through mergers and acquisitions (M&A), with defense as its main focus, actively pursuing investments to expand MRO contracts for U.S. naval vessels. In contrast, HD Hyundai is primarily focused on general shipbuilding, with defense as a part of it, and is cautious about risks due to its corporate culture.”
The potential acquisition of Subic Shipyard not only reflects these companies’ ambitions but also underscores broader trends within the global defense industry. With increasing geopolitical tensions driving demand for modernized naval capabilities, both HD Hyundai and Hanwha are positioning themselves to capitalize on these opportunities while strengthening ties with key allies like the United States.