South Korea’s HD Hyundai Heavy Industries Co. is seeking to acquire Leeyoung Industrial Machinery Co., a domestic shipbuilding equipment maker, according to KED Global.
According to industry sources, HD Hyundai Heavy submitted its bid to acquire Leeyoung on Monday, the last day for bid submission. The shipbuilder’s submitted acquisition price is known to be in the hundreds of billions of won, or hundreds of millions of dollars.
Ships are typically constructed by assembling around 200 large blocks of parts. Leeyoung specializes in manufacturing curved blocks – the most challenging part to produce given their shape. If successful, the deal would mark HD Hyundai’s first to acquire a block-making partner.
Leeyoung Industrial Machinery specializes in manufacturing curved blocks of a ship – the most challenging part to produce given their shape.
When building a ship, shipbuilders use cranes to move blocks of the required size and then weld them together, much like stacking Lego blocks.
Unlike flat blocks, curved blocks are difficult to manufacture due to their curvature, according to industry officials. Because of manufacturing difficulties, only a few companies, including Leeyoung, can produce curved blocks.
To construct a 250-meter-long liquefied natural gas (LNG) carrier, about 200 blocks are needed, of which 37.5% or 75 blocks are curved.
Leeyoung, which posted around 70 billion won ($53.3 million) in revenue last year, has facilities capable of producing up to 20,000 tons of "mega blocks," made by combining about 10 curved blocks used in the construction of a ship's bow and stern.
Korean shipbuilders typically source around 30% of the necessary blocks through partner companies.
Despite its technical prowess, Leeyoung posted operating losses for 11 straight years through 2023, leading to its financial difficulties and eventual sale.
HD Hyundai Heavy Industries plans to increase its in-house block production capacity by acquiring Leeyoung.
Since July, HD KSOE has been importing blocks for merchant ships from China. Hanwha Ocean has a subsidiary in China that manufactures blocks, while Samsung Heavy Industries is sourcing blocks through Chinese companies, including Hengli Heavy Industry.