Hitachi Zosen, once one of the biggest names in Japanese shipbuilding, has decided to sell its small shareholding in Japan Marine United (JMU) and end its long-standing association with the company.

The outfit plans to sell its stake to fellow JMU shareholders IHI Corp and JFE Holdings.

Hitachi Zosen merged its shipyard business with the shipbuilding arm of steel maker NKK Corp in 2002 to form Universal Shipbuilding. In 2013, Universal became JMU through the addition of IHI Corp’s shipbuilding business.

However, Hitachi Zosen has seen its shareholding in JMU dilute to just 1.2% through the consolidation process even though its Ariake shipyard is one of the biggest yards in the merged company.

IHI Corp and steel-maker JFE Holdings are now the dominant owners of JMU, each holding 49.4% of the company.

Hitachi Zosen faces further dilution of its shareholding when Imabari buys into JMU as part of a plan to establish a new joint venture to be called Nihon Shipyard.

Explaining the decision to sell the stake as part of Hitachi Zosen's second-quarter earnings announcement, company president Sadao Mino said its shareholding in JMU would no longer have any significance for his company if it were diluted further.

The company plans to carry out the sale once the tie up with Imabari has been approved by the competition authorities.

Competition approval for the proposed Nihon Shipyard has been delayed by the coronavirus and it is not expected to get off the ground until December this year at the earliest.

Once Nihon Shipyard is approved, Imabari will buy an equity stake in JMU.

Hitachi Zosen will remain involved in the shipbuilding business after the share sale. It has a 40% shareholding in Naikai Shipbuilding, and it is also a leading major supplier of marine diesel engines to the shipbuilding industry.