October 07, 2008

JFE Holdings and IHI to launch final shipbuilding merger talks – Report

The Nikkei without citing sources reported that Japan’s JFE Holdings Inc and heavy machinery manufacturer IHI Corp have agreed to enter final negotiations to consolidate their shipbuilding operations, with an eye towards launching the merged entity next year.

The business daily said that an official announcement is likely as soon as Tuesday.

IHI approached its counterpart at the end of last year about combining wholly owned unit IHI Marine United Inc and Universal Shipbuilding Corp then a 50:50 JV of JFE and Hitachi Zosen Corp.

The report said that JFE turned Hitachi Zosen Corp. into a subsidiary at the end of last month by raising its stake in the company to 85%.

In the final round of talks, JFE and IHI will decide on the merged company's name, the investment stakes and other details.

The merger of Universal Shipbuilding and IHI Marine would create a company with sales of JPY 345 billion (USD 3.37 billion) and a shipbuilding capacity of some 3 million tonnes, surpassing current leader Imabari Shipbuilding Co in both categories.