Approved by the Board... Integrated HD Hyundai Heavy Industries to Launch in December
Aiming for 10 Trillion Won in Annual Defense Sales by 2035
Establishing Investment Corporation in Singapore to Manage and Develop Overseas Operations
HD Korea Shipbuilding & Offshore Engineering has begun restructuring its shipbuilding business ahead of the full-scale launch of the MASGA project in the United States. As global competition intensifies, the company aims to enhance its competitiveness in the Korean shipbuilding and defense sectors and accelerate order growth.
On August 27, HD Korea Shipbuilding & Offshore Engineering, HD Hyundai Heavy Industries, and HD Hyundai Mipo each held board meetings and announced that they had approved a merger plan between HD Hyundai Heavy Industries and HD Hyundai Mipo. The two companies will hold an extraordinary general meeting of shareholders and undergo a business combination review, with plans to launch a new integrated entity, "HD Hyundai Heavy Industries," in December.
Yard views of HD Hyundai Heavy Industries (top) and HD Hyundai Mipo (bottom). Provided by HD Hyundai
This merger is intended to maximize synergy through both quantitative and qualitative scaling up within the shipbuilding industry, as well as to respond to technological development and global market diversification. With China and Japan recently boosting their competitiveness through mergers between their respective No. 1 and No. 2 shipbuilders, the launch of the integrated HD Hyundai Heavy Industries is drawing attention as a merger between the world's leading medium- and large-scale shipbuilders.
The defense sector, in particular, is considered the core of this merger. HD Hyundai Heavy Industries has the largest record of naval vessel construction and exports in Korea, having accumulated significant technology and expertise. By adding Hyundai Mipo's medium-sized docks, facilities, and workforce capabilities, the integrated entity is expected to expand its order opportunities amid the global trend of naval power enhancement. The new company will address Hyundai Mipo's current limitation of not holding a warship construction license, raising the possibility of entering the U.S. market together.
One of the main drivers behind the merger is the growth of the global defense market. According to British defense magazine Janes, over the next 10 years, new naval vessel contracts are expected to reach 2,100 ships, with a total value of approximately 360 billion dollars. The integrated HD Hyundai Heavy Industries has set a goal of achieving 10 trillion won in annual defense sales by 2035.
In addition, the company will accelerate its efforts in the special-purpose vessel market, such as icebreakers, and in the development of new eco-friendly ship technologies. By combining the research and development capabilities of both companies, they plan to expand the application of new technologies from medium-sized ships to large vessels, reduce risks, and improve investment efficiency.
Overseas business will also be strengthened. HD Korea Shipbuilding & Offshore Engineering plans to establish a shipbuilding investment corporation in Singapore within this year to manage production bases in Vietnam, the Philippines, and other locations, as well as to oversee the discovery and collaboration of new yards. Through these efforts, the company aims to regain market share in the bulk carrier and tanker segments, which have been overtaken by Chinese shipbuilders.
A representative from HD Korea Shipbuilding & Offshore Engineering stated, "This business restructuring is the result of a strategic effort to achieve 'a broader market' and 'a stronger shipbuilding industry.' With the launch of the integrated entity, we will expand our market presence and secure unrivaled technology to lead the future shipbuilding market."
Meanwhile, the merger will proceed by issuing new shares of the surviving company, HD Hyundai Heavy Industries, to shareholders of HD Hyundai Mipo. The merger ratio is set at 0.4059146 shares of HD Hyundai Heavy Industries common stock for each share of HD Hyundai Mipo common stock.
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