(2nd LD) HD Hyundai Heavy, Hyundai Mipo to merge into unified shipbuilder amid S. Korea-U.S. project push
SEOUL, Aug. 27 (Yonhap) -- HD Hyundai Heavy Industries Co. and HD Hyundai Mipo Dockyard Co. plan to merge into a single entity under a restructuring plan approved by their boards Wednesday aimed at strengthening their shipbuilding and defense capability.
The two shipbuilders, both affiliates of HD Hyundai's intermediate holding company, HD Korea Shipbuilding & Offshore Engineering Co. (KSOE), each held board meetings to approve the plan to finalize the merger by December.
The consolidated entity will relaunch as HD Hyundai Heavy Industries within the year. The integrated company has set a defense sales target of 10 trillion won (US$7.2 billion) annually by 2035.
HD Hyundai Heavy and HD Hyundai Mipo are ranked No. 1 and No. 15 in the world by order backlog, respectively, and are considered South Korea's flagship yards. HD Hyundai Heavy is widely regarded as a global leader in high-value liquefied natural gas (LNG) carriers, while HD Hyundai Mipo is best known for ship repair and midsize vessel construction.
HD KSOE said the restructuring is a strategic move to maximize synergies through expansion, while accelerating the development of cutting-edge technologies to secure a decisive competitive edge in the global market.
The move comes as South Korea has recently announced its plan to enhance its shipbuilding ties with the United States under an initiative dubbed "Make American Shipbuilding Great Again (MASGA)."
China and Japan have also recently announced plans to consolidate their top two shipbuilders to enhance their competitiveness.
Some industry watchers see the merger as a strategic step to respond to the launch of the MASGA project.
"This move appears to be aimed at consolidating resources with MASGA in mind," an industry official said. "In particular, the company is expected to actively target the naval ship market."
The integrated HD Hyundai Heavy is expected to leverage its track record in naval shipbuilding, combined with Hyundai Mipo's docks and expertise in warship construction.
British defense journal Janes projects the global naval shipbuilding market will see more than 2,100 new contracts worth about $360 billion over the next decade.
Beyond defense, the unified yard plans to expand into icebreakers and other special-purpose vessels, while pooling research and development, and design resources to lead in eco-friendly vessel technologies.
HD KSOE also plans to establish a Singapore-based investment unit this December to oversee overseas shipyards in Vietnam and the Philippines.
"This business restructuring is the result of strategic deliberation under the goals of 'a broader market' and 'a stronger shipbuilding industry,'" an HD KSOE official said. "With the launch of the integrated entity, we will expand our market presence and secure cutting-edge technologies, ultimately leading the future shipbuilding market."
Founded in 1972, HD Hyundai Heavy first gained global recognition in 1974 by successfully building two oil tankers and went on to construct the Ulsan, Korea's first domestically built naval vessel, in 1980.
HD Hyundai Mipo traces its roots to 1974 as a repair shipyard division within HD Hyundai Heavy, before being spun off as an independent entity in 1975. It later quickly grew into a leading global ship repair yard.
odissy@yna.co.kr
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