Korean shipbuilders mull defensive GTT bid: sources

SEOUL Mon Jan 9, 2012 10:25am EST

A man walks past solar panel displays by South Korea's Hyundai Heavy Industries at the International Photovoltaic Power Generation (PV) Expo in Tokyo March 2, 2011. REUTERS/Yuriko Nakao

A man walks past solar panel displays by South Korea's Hyundai Heavy Industries at the International Photovoltaic Power Generation (PV) Expo in Tokyo March 2, 2011.

Credit: Reuters/Yuriko Nakao

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SEOUL (Reuters) - Three South Korean shipbuilders are considering a joint 1 billion euros ($1.3 billion) bid for a French engineering company to prevent a Chinese rival from challenging their domination of the global LNG carrier market, sources with direct knowledge of the matter said.

Daewoo Shipbuilding & Marine Engineering (042660.KS), Hyundai Heavy Industries (009540.KS), and Samsung Heavy Industries (010140.KS) are mulling a joint bid for GTT (Gaztransport & Technigaz), the sources told Reuters on Monday.

GTT develops systems for storing liquefied natural gas (LNG) -- gas cooled to liquid -- on ships and on land and then licenses this technology to shipbuilders and LNG plant manufacturers.

Sources familiar with the matter told Reuters in November that GTT's three shareholders -- GDF Suez (GSZ.PA), the world's biggest utility by market value, French oil company Total (TOTF.PA) and U.S. private equity fund Hellman & Friedman -- were planning to sell their stakes.

South Korean companies are currently the principle shipbuilding users of GTT technology, according to a list of the vessels under construction and in service published on the French company's website.

South Korean shipping-to-shipbuilding conglomerate STX Group (011810.KS) is also among those listed as using GTT systems, as is Shanghai's Hudong-Zhonghua Shipbuilding, which is controlled by China State Shipbuilding Corp.

"Should a Chinese firm take over the company, it would be a challenge in the LNG ship market, where Korean players have the upper hand currently," one source said.

Hyundai, Daewoo and Samsung declined to comment, as did Total, Hellman & Friedman and GDF Suez. GTT did not respond to a request for comment.

Hellman & Friedman bought its 30 percent stake from Italian energy engineering group Saipem in 2008, for 310 million euros.

A source familiar with the matter said that the shareholders receive regular dividends from GTT.

The shipbuilding industry had a tough 2011 and some analysts predict more pain this year as an oversupply of ships, ordered when times were good, and growing global economic turmoil hit earnings from making vessels to transport crude, coal and iron ore.

The LNG carrier sector is one of the few areas of growth predicted this year in the shipping sector with demand for the energy source outpacing the availability of existing LNG tankers.

A number of ship owners and yards are aiming to diversify into LNG to limit losses from the dry bulk and crude tanker markets.

($1 = 0.7865 euros)

(Writing by Tom Bergin. Additional reporting by Tom Bergin and Jonathan Saul in London and Caroline Jacobs in Paris; Editing by Jonathan Hopfner and Hans-Juergen Peters)

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