China’s mammoth merger of shipbuilders nears, and so do the industry implications

China’s two major shipbuilders appear to be mere days from completing a merger that will form the largest publicly listed shipbuilding company in the world.

The China Shipbuilding Industry Company announced that Tuesday will be the final trading day for its shares before the company is absorbed by China CSSC Holdings.

Analysts have deemed the move a strategic masterstroke in Beijing’s broader industrial and military ambitions, particularly as the United States increasingly views China as a rival in multiple sectors.

“This merger marks the largest strategic restructuring in China’s shipbuilding history, aimed at optimising resource allocation and enhancing competitiveness in the global market,” said Xu Yi, an analyst at Haitong Futures.

She explained that the merger, which covers the three core businesses of military equipment, commercial vessels and marine engineering, will focus on phasing out low-efficiency docks while concentrating on high-end vessels.

CSSC Holdings, the combined entity, will offer a comprehensive range of business operations, with total assets exceeding 400 billion yuan (US$55.6 billion) and annual revenue surpassing 130 billion yuan, Founder Securities said in a July note after the merger was greenlit by the Shanghai Stock Exchange.

When unveiling the merger terms in September, the two companies noted that the merger was intended to further align with national strategic priorities, strengthen support for military development, and better regulate intra-industry competition.

South China Morning Post