- China’s two largest shipyards are merging.
- The merger will create the world’s biggest shipbuilder.
- This move aims to strengthen China’s global maritime influence.
China’s two largest shipyards, China CSSC Holdings and China Shipbuilding Industry Company (CSIC), are preparing for a significant merger to enhance operations and align with government directives. This move is part of China’s strategy to boost shipbuilding efficiency and strengthen its position in the global market, reports SCMP.
The Merger Announcement
China CSSC Holdings announced plans to issue shares to acquire CSIC, though details of the merger terms were not disclosed. Both companies, subsidiaries of China State Shipbuilding Corp (CSSC), halted trading after the announcement, causing their stocks to drop.
CSSC is the world’s largest shipbuilding conglomerate, with one-third of the global market share. The merger will create a combined entity with annual sales of 122 billion yuan (US$17.1 billion), surpassing South Korea’s Hyundai Heavy Industries. The new shipyard will be capable of building a range of vessels, including warships, container ships, and passenger liners.
Strategic Advantages
Analysts, such as Man Zaipeng from Sinolink Securities, says, “A consolidation will help optimise their business structure with strengthened capability to take orders for more advanced vessels.” The growing global demand for Chinese-built ships “bodes well for earnings of the new entity.”
China has become the world’s leading builder of merchant ships, supported by global trade growth. The upcoming merger completes CSSC’s restructuring of its core manufacturing assets, positioning the company for new growth opportunities in shipbuilding and marine engineering.
Previous Mergers and Military Expansion
This merger follows the 2019 consolidation of China State Shipbuilding Corp and China Shipbuilding Industry Corp. Both shipyards have played a critical role in modernizing China’s navy by building aircraft carriers, amphibious assault ships, destroyers, and nuclear submarines.
Before the trading halt, China CSSC Holdings’ shares fell by 9%, while CSIC’s shares dropped by 6.4%. The stock-based merger would require CSSC to issue 330 million new shares, expanding its capital base by 42% to complete the acquisition of CSIC.
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Source: SCMP
