South Korea’s Hyundai Heavy Industries Holdings Co., the parent company of the world’s largest shipbuilder, said it signed a $1.2 billion deal to sell a minority stake in its oil-refining unit to Saudi Aramco, Wall Street Journal reports.
The sale’s proceeds will help the Hyundai shipbuilding unit fund its $2 billion acquisition of rival Daewoo Shipbuilding & Marine Engineering Co., people with knowledge of the matter said. The deal between the two Korean shipyards was announced in January, the Journal adds.
Hyundai Heavy on Monday said in a regulatory filing that it would sell a 17% stake in Hyundai Oilbank Co. to government-owned Aramco, known officially as Saudi Arabian Oil Co., the world’s largest crude exporter. Aramco has an option to buy an additional 2.9% of the refining unit.
The merger of Hyundai Heavy and Daewoo Shipbuilding, which is set to be completed this year, would create a behemoth controlling 20% of the global market for new ships and an even bigger share of the fast-growing market for liquefied natural gas carriers. The $2 billion all-stock deal follows a $2.25 billion injection that Seoul granted Daewoo on top of a $2.6 billion bailout in 2017.
The refining deal will make Aramco the second-largest holder of Hyundai Oilbank. Hyundai Heavy will retain a 74.1% stake, with Hyundai Motor Co. holding 4.3%, according to a person with knowledge of the deal. The refining unit’s assets are concentrated at the Daesan petrochemical complex 81 miles southwest of Seoul and are capable of processing 650,000 barrels of oil a day.
In a separate deal, Saudi Arabia’s Public Investment Fund is looking to sell its 22% stake in national oil-shipping company Bahri Oil to Aramco, shipping executives said. Bahri is one of the world’s top tanker operators, with a fleet of 45 very large crude carriers and 36 chemical-products tankers, the Journal noted.
Last month, the Saudi sovereign-wealth fund struck another deal with Aramco, with the oil company agreeing to buy a 70% stake in Saudi Basic Industries Corp., the kingdom’s petrochemicals firm, for $69.1 billion.