Two Japanese shipbuilders, Imabari Shipbuilding and Japan Marine United (JMU) are set to form an alliance that would be the third-largest shipbuilding conglomerate, globally
The move comes in the wake of news from China that shipbuilding corporations CSSC and CSIC are merging to create what will become the world’s largest shipbuilder.
Imabari and JMU have plans to enter into a capital tie-up that would offer scale to rival Chinese and South Korean competitors. The deal would mean Imabari, the larger of the two companies, will take a nearly 30% stake in JMU by purchasing new shares. A final agreement is due by the end of March 2020.
The alliance between Imabari and JMU would account for about 10% of global shipbuilding business and would make the resulting shipbuilding group the third-largest in the world. In 2018, Imabari and JMU accounted for about 40% of Japan’s shipbuilding construction volume.
The partnership will jointly establish a company to design and sell ships, collaborating on a variety of vessels including cargo ships, tankers and vehicle carriers.
The alliance is not solely to contain the influence of the Chinese shipbuilder. In South Korea, Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering’s (DSME) planned merger is subject to regulatory approval. However the merger has seen opposition from DSME’s workers.
Imabari, a family controlled company, is the largest shipbuilder in Japan and remains unlisted. The company buys more steel than any other Japanese company except automobile manufacturer Toyota Motors.
JMU is Japan’s second-largest shipbuilder. It was borne out of a merger between IHI’s shipbuilding arm, Marine United and Universal Shipping corporation, a subsidiary of JFE Holdings in 2013.
Imabari’s network of affiliated companies makes the shipbuilder cost-competitive. JMU plans to incorporate Imabari’s expertise in cost controls to improve earnings.