Dalian Shipbuilding Industry Co (DSIC) will merge with Bohai Shipbuilding Industry Co in the latest round of internal restructuring at state-owned conglomerate China Shipbuilding Industry Corp (CSIC).
According to an exchange filing, China Shipbuilding Industry Co Ltd (CSICL)—the Shanghai-listed flagship unit of CSIC—will transfer the 100% stake it owns in Bohai Shipbuilding to DSIC.
DSIC is also wholly owned by CSICL.
“The merger is based on the Chinese government’s policy in supply-side reforms for state-owned enterprises. We would be able to reduce excess capacity and improve operational efficiency,” CSICL said in the filing.
“We are also aiming to transform our merchant and offshore shipbuilding units for the better, while at the same time developing and integrating our civil and military divisions.”
The merger proposal was unanimously approved by the CSICL board on Wednesday. Further details are expected to be announced in due course.
Focusing on both merchant and navy shipbuilding businesses, DSIC is one of the largest shipyards in China.
Clarksons data shows its orderbook consists of 28 vessels totalling 6.02 million dwt for delivery between 2019 and 2021.
Bohai Shipbuilding, capable of constructing both offshore and cargo-carrying vessels, has an orderbook of 14 vessels with 2.23 million dwt for delivery in the same period.
With persistently weak newbuilding demand, CSIC has embarked on a series of internal restructuring to reduce costs and improve efficiency over the past few years.
Many market participants have anticipated that CSIC will eventually merge with China State Shipbuilding Corp (CSSC), another Chinese state-run shipbuilding major.
Earlier this month, executives of the two groups met in the CSSC headquarters in Beijing, vowing to enhance communication and cooperation.
