China State Shipbuilding Corporation Units to Merge

Two divisions of China’s largest shipbuilding conglomerate, China State Shipbuilding Corporation (CSSC), are set to merge through a share swap deal designed to eliminate competition and form a new global powerhouse in the shipbuilding industry.

China CSSC Holdings, the flagship arm of CSSC listed on the Shanghai Stock Exchange, plans to absorb its smaller counterpart, China Shipbuilding Industry Corporation (CSIC), by issuing A-shares to CSIC shareholders.

This merger is poised to establish the world’s largest publicly traded shipbuilding company and represents the most significant asset consolidation since CSSC was formed through the merger of China State Shipbuilding Corporation and China Shipbuilding Industry Corporation in 2019.

CSSC Holdings encompasses major subsidiaries such as Jiangnan Shipyard, Shanghai Waigaoqiao Shipbuilding, Chengxi Shipyard, and Guangzhou Shipyard International. CSIC, on the other hand, includes prominent yards like Dalian Shipbuilding Industry Co., Bohai Shipbuilding Heavy Industry, Wuchang Shipbuilding Industry Co., and Qingdao Beihai Shipbuilding, among others.

This integration of China’s two primary shipbuilding companies aligns with the country’s broader strategy of consolidating state-owned enterprises across various sectors to create stronger entities and minimize internal competition. This move is similar to the mergers of China COSCO Shipping Corporation with China Shipping Group in 2016 and China Merchants Group with Sinotrans CSC in 2017.

The merger, classified as a "major assets restructuring," aims to "accelerate the high-quality development of the ship assembly business, standardize competition in the industry, and improve the operational quality of listed companies," according to a filing by CSSC on the Shanghai Exchange. The merger will not alter the ultimate control of either company.

Trading of shares for both entities has been suspended since Tuesday and is expected to remain halted for up to 10 days.