UPDATE 2-S.Korea STX buys out Aker Yards in tender offer

(Adds analyst comments, more details)

SEOUL, Aug 18 (Reuters) - South Korea's STX Group said on Monday it was more than doubling its stake in No. 1 European ship maker Aker Yards AKY.OL, to 88.4 percent through a $635.5 million tender offer as it seeks to grow its portfolio of businesses.

The acquisition of Aker Yards gives STX Group, a shipbuilding-to-energy conglomerate, high-end cruise ship and specialised offshore vessel businesses.

The group's shipbuilding unit STX Shipbuilding 067250.KS ranks No. 6 among worldwide shipyards and has strength in bulk carriers and container ships.

Analysts were skeptical about the deal’s benefits, however, with Aker Yards suffering weak profitability and its cruise business particularily vulnerable to the economic downturn.

The buyout STX Group cost about 1.4 trillion won ($1.34 billion) altogether, for the tender offer and previous share purchases, according to the group.

“The acquisition may be necessary for STX to grow its portfolio to include more lucrative, value-added ships, but new businesses like cruise ships don’t have strong prospects at the moment,” said Joey Lee, an analyst at Goodmorning Shinhan Securities. “Investors need to be cautious until Aker Yards see an improvement in its bottom line.”

STX said in a statement it amassed 54.51 million shares in the Norwegian company in the 63 crowns-per-share tender offer as of Aug. 18, securing an additional 48 percent stake.

STX Shipbuilding had raised its stake in Aker Yards to 40.4 percent in June, which triggered a mandatory offer to buy out other minority owners.

Funding will come from STX Shipbuilding’s cash reserves and investors, it added.

Shares in STX Shipbuilding, worth $1.6 billion in the market, were up 1.09 percent at 23,200 won by 0426 GMT, outperforming the wider market's .KS11 0.79 percent loss. Aker Yards shares last traded at 62.5 crowns.


STX Shipbuilding competes with bigger rivals in South Korea, which is home to the world's top shipbuilders -- industry leader Hyundai Heavy Industries Co 009540.KS, No. 2 Samsung Heavy Industries Co 010140.KS, and third-placed Daewoo Shipbuilding and Marine Engineering Co 042660.KS.

It hopes Aker Yards’s advanced technologies in cruise ships, ice breakers and other specialised vessels would help it better fight those giants and become a global player.

Following the acquisition, STX Group plans to rename the company STX Europe ASA and make the main headquarters a specialised offshore vessel manufacturing base.

Aker Yards’ French unit, which will be renamed STX France Cruise SA, will focus on the cruise and defence businesses.

Aker Yards competes with Italy’s Fincantieri and Germany’s Meyer Werft in the cruise ship market, one of the few niches of the shipbuilding industry not dominated by Asian makers.

Earlier in August, Aker Yards reported lower-than-expected second-quarter results of 72 million crowns ($13.3 million) in earnings before interest, tax, depreciation and amortisation (EBITDA) and warned of tougher times ahead. Shipyards around Europe are facing a weaker global economy and rising costs.

STX Shipbuilding meanwhile reported April-June net profit of 66.2 billion won, up 15 percent from a year earlier, on 54 percent higher quarterly revenue of 710.9 billion won. ($1=1043.6 Won) ($1=5.4036 Norwegian Crown) (Editing by Louise Heavens)