HAMBURG (Reuters) - A German maker of yachts and naval vessels agreed to buy insolvent shipyard Peene in a rare deal as the shipbuilding sector in Europe’s biggest economy crumbles.
Bremen, Germany-based Luerssen Group is paying less than 20 million euros ($26.3 million) to buy former Communist East Germany’s biggest naval shipbuilder, Peene’s insolvency administrator Berthold Brinkmann said on Monday.
The deal to buy Peene - which makes patrol boats for the coast guard and oil spill response vessels, among other - will make Luerssen Germany’s biggest maker of naval surface vessels. The acquisition will become effective on May 1, 2013.
The global shipbuilding industry has been hit by a slump in demand for sea freight, an oversupply of container ships ordered before the economic crisis, and competition from rivals in China and Korea.
Peene’s parent company P+S Werften filed for insolvency in August, having failed to convince some of its customers to make advance payments to help the company bridge a liquidity shortfall.
European banks, meanwhile, are under growing pressure to cut their exposure to risky and dollar-denominated assets, such as ship and trade finance, to shore up their reserves as they strive to meet financial regulators’ tougher capital rules.
Credit rating agency Moody’s has warned that German banks’ high exposure to cyclical sectors such as shipping leaves them vulnerable to any worsening of the euro zone debt crisis.
Luerssen, which has been building ships since 1876, will make job offers to 360 of Peene’s employees, insolvency administrator Brinkmann said. Before the insolvency filing, the company had 540 employees.
He also said several parties, both in Germany and abroad, had shown interest in P+S’s other shipyard, Volkswerft Stralsund. He said he was confident Volkswerft Stralsund would be able to resume work in early January on two ferries ordered by Denmark’s DFDS (DFDS.CO).
($1 = 0.7598 euros)
Reporting by Jan Schwartz; Writing by Maria Sheahan; Editing by David Cowell