Shipbuilder STX has bought a 39.2% in Norwegian shipbuilder Aker Yards, one of the top four cruise ship builders, for US$830 million.
On the outside, it looks like just an another acquisition. However, Korean shipbuilding firms are looking to enter the cruise ship market in order to leapfrog Chinese competition. Other Korean shipbuilders, such as Samsung, which already has built ferries for European ship owners, are developing the capabilities to build cruise ships in house. But for STX, it seems that they have decided it’s better to buy what is already out there, instead of investing the time and money to do things in house.
All in all, a smart move by STX. Hopefully, STX won’t squander their acquisition by meddling and let Aker do their thing.
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Here’s an article for free from the Wall Street Journal about Korea’s prospects of staying on top in ship building. It was published today, I think:
http://online.wsj.com/article/.....lenews_wsj
I seem to recall several comments being here. Were they deleted?
I wouldn’t know, I just checked in, only saw two, and was surprised to read that comments may have been deleted.
Of course I have to admit that I had a hard time figuring out which was more surprising, the possibility of deleted comments or Pawi not ripping me apart.
What sort of dysfunctional techtopia do we live in where the owner of his own blog can’t even tell what’s going on with it?
I wouldn’t be too hard on Robert, heck I don’t even know what’s going on with the comments of my original posts.
I don’t mean to be hard; it just seems odd.
STX’s acquisition of Aker has been the biggest piece of economy news here in Finland, as Aker has three shipyards here. Seems that people are relieved that the new stake owner is from the same branch and not a bunch of some kind of faceless money guys. Just hoping STX will not bring the “World Best” Konglish over here…
hey! i made areally long post and this time i actually thought before i wrote it! (and reviewed my spelling and capitalization) wassupwiththat?
This is huge stake through the heart of Europes shipbuilding industry… It will become as dead as the US. As we speak Aker employees are going on strike demanding higher wages, making themselves less competitive with Asia and therefor less relevent to the market.
With this, Asia has finally breached the last line of defense of Europes shipbuilding industry, STX will take what they learn from Aker and set up new capacity somewhere like China.
It will take a while to build up the massive supply chains, modular cabin manufacturing yards, advanced material production plants (these will probably just be exported form Europe or the US first) but it will happen.
With this STX will even overtake Daewoo and Samsung in terms of capacity as well. Five years ago these guys were nothing, now, they about to be making Hyundai nervous… especially if they buy DSME next.
mjw: something strange is indeed afoot. Your post is in my rss feed… but it isn’t here any more.
STX has been good to me.
Also, I too have noticed threads and things disappearing here too and not just recent postings either.
Too many cooks in the kitchen, perhaps?
So is it ok to say that the general feeling of Europeans is that this buyout is bad? Also, why is it that stocks for Aker have gone up so quickly? Aren’t they worried STX might do a bad job of handling the business or are they that confident in Koreans’ ability to ignore unions?
Okie, my quick take on this…
STX acquisition of Aker is good because we got it for a good price, swooped in and bought the stock when it was probably close to the bottom of where it should be trading at due to (temporarily) bad Q2 results. 20% gain a day after the announcement? That’s gravy.
Is it good strategically? Well the Korean ship builders have been looking at ways of getting into the lux ship building business, where margins should theoretically be better because the Chinese are breathing down their necks in areas such as freighters, old tankers, LNG tankers, etc. Incidentally, Aker’s margins are bad when compared to STX and other Korean ship builders. I call it your standard socialistic European inefficiency that is making Aker uncompetitive, but anyways. STX has the edge when it comes to more efficient ship building methods and technology, but Aker has the edge in interior design, cabin design and lux ship layout, where the Koreans have zero experience. You marry efficient manufacturing with swank interior design and other lux amenities then you may just have something here.
A wild card are those darn Finnish and Norwegian unions, which is why I’d suspect the union friendly European press is scared/nervous about all this. The unions are worried that their jobs will go to Korea and/or they will loose jobs and/or they will have to make salary/benefit concessions. But even if the European press is negative, then why did the stock jump 20% in one day? The answer is that it’s the simpler minds that are worried about this, but those with business acumen know that this deal is good in the long run. Those in the know realize that the European ship building industry has been in a multi-decade decline in the face of stiff competition from Asia. Moving all the manufacturing (and jobs) and just closing down Aker is impractical and will cost more money in the long run. However, simpler minds don’t understand this and they tend to gravitate towards irrational fear when presented with a complex, or ill understood event. What’s more likely is that STX will try to make these ship yards more efficent and at least try to make them as productive as the Korean ship yards which is good news for Aker. How likely is this? Well I’d have to say that Kang Duk Soo (Chairman of STX) is a smarter man then me and he thinks he’s got a good chance of doing this, but ultimately only time will tell.
#14,
Korea’s recent reputation with ship building unions is much better then their reputation with car workers unions.
I agree with WangKon on this one. I think this takeover by STX will be a good thing for all involved (except the unions). The European shipbuilding industry has been on a long decline and this will be one of the ways to prolong its life. For Korea and STX, it is a good move, as the Chinese are moving up fast, as WK notes. I heard from an STX watcher that they tried to set up shop in China to build ultra large size tankers (something like 500,000 ton size, I think?), but the Chinese government stepped in and nixed the project, even after it had been approved by several layers of government and after STX had spent over a billion on a site.
If you’re talking about the STX Dalian shipyard, Snow, then you’ve got an inside scoop on some major news, there. I just worked on a brochure for STX that trumpeted quite proudly about the Dalian venture, and I don’t think there’s been any official reports of it being snuffed.
For the record, I tried my best to do something about the “World Best” logo, suggesting maybe they could keep using it in Korea, but not externally. My opinion, alas, must go looking elsewhere for the respect it deserves.
Linkd, I heard that from a friend who’s a (foreign) day trader here in Korea. He follows STX very closely, but I don’t know where he got his info from. I just assumed that he picked this up from the news, but from what you say, my assumption must have been wrong. He knows a number of fund managers and others in the financial and brokerage biz, and sometimes gets tips (the quality of the tips varies), but I’m not sure how accurate that info is. I will ask him next time I see him as he just mentioned it to me in passing when discussing STX, which I had never heard of until then.
I remember that he said that the government nixed STX’s plan to build ultra large sized tankers and told STX they could only build smaller ships there as China wants to move into building the large ones and didn’t want competition. But as I said, I will ask him where he got his info from.
This sounded like another pump-and-dump scheme until I looked up STX (stock code: SXSHF) and realized it isn’t a publicly-traded stock (listed with the OTC).
By the way, not to confuse STX with the stock code STX, which is “Seagate Technology,” but actually has nothing to do with the sea (they make disk drives).
boshinting, I’m not sure which stock you’re talking about, but the one I know about certainly is a publicly traded stock and is involved in shipping. There are several affiliates, such as STX Engines, I believe, and STX Chosen, among others. I’ve seen them perform on a daily basis and the STX stock I was watching is very volatile. I think they may be involved in disk drives, but are also involved in lots of other things as they are quite large. They do have ads on tv showing an ice breaker. And I see it’s listed under distribution (logistics?) companies on the KOSPI. Then again, there’s an STX Pan Ocean stock so maybe that’s the one that builds ships, but I think that’s an affiliate, anyway.
Snow, like I said, don’t confuse STX with the stock code STX.
As far as the one that’s publicly traded, look up the stock code. The STX ship-building company that is referred to in the article is STSHF.
Sorry for not reading your post closely, boshintang. Yes, you’re right, STSHF is not listed. Sounds like it might be one of STX’s unlisted affiliates, of which they may have several, I’m not sure. Just recently, they took one of those affiliates public in an IPO and demand for the shares was heavy, so maybe STSHF is one that they are holding for a possible future IPO?