Two Chinese Shipbuilders to Merge, Creating Global Titan

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Workers at a CSSC shipyard build a cargo ship in Shanghai, May 23. Photo: VCG

Two subsidiaries of China State Shipbuilding Corp. Ltd. (CSSC) are planning a merger that could reduce competition within the state-owned conglomerate and create the world’s largest listed shipbuilder.

China CSSC Holdings Ltd. (600150.SH) is to absorb China Shipbuilding Industry Co. Ltd. (CSIC) (601989.SH) by issuing A-shares to the latter’s stockholders, the companies said in their stock exchange filings dated Tuesday.

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CSSC subsidiaries China CSSC Holdings Ltd. and China Shipbuilding Industry Co. Ltd. plan a merger to create the world's largest listed shipbuilder.
The new entity will have assets of nearly 400 billion yuan ($56 billion) and annual sales exceeding 100 billion yuan.
The merger aims to integrate resources and reduce competition internally, raising questions on its impact vis-à-vis COMEC.

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Who’s Who

China Shipbuilding Industry Co. Ltd.: China Shipbuilding Industry Co. Ltd. (CSIC) (601989.SH) is a subsidiary of China State Shipbuilding Corp. Ltd. (CSSC). It focuses on the northern China market and is a top supplier of military equipment to the People’s Liberation Army Navy. CSIC is being merged with China CSSC Holdings Ltd. by issuing A-shares. The combined entity will hold one-third of the global civil ship order market, creating the world's largest listed shipbuilder.

China State Shipbuilding Corp. Ltd.: China State Shipbuilding Corp. Ltd. (CSSC) is a state-owned conglomerate in China, originally formed by merging China CSSC Holdings and CSIC in 2019. It focuses on shipbuilding and military equipment, controlling a significant portion of the global market. Two of its subsidiaries, China CSSC Holdings and CSIC, are merging to create the world’s largest listed shipbuilder, with expected assets of nearly 400 billion yuan and annual sales over 100 billion yuan.

China CSSC Holdings Ltd.: China CSSC Holdings Ltd. (600150.SH) is a subsidiary of China State Shipbuilding Corp. Ltd. (CSSC). It plans to merge with China Shipbuilding Industry Co. Ltd. (CSIC). The merger will create the world's largest listed shipbuilder with total assets nearing 400 billion yuan and annual sales over 100 billion yuan. China CSSC Holdings primarily operates in the southern China market and is involved in both civil and military shipbuilding.

CSSC Offshore and Marine Engineering Group Co. Ltd.: CSSC Offshore and Marine Engineering Group Co. Ltd. (COMEC), controlled by China CSSC Holdings, focuses on designing and manufacturing military equipment. In June 2021, CSSC promised to avoid competition with COMEC through asset reorganization and equity swaps for five years. The merger of China CSSC Holdings and CSIC raises questions about future competition reduction strategies with COMEC.

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What Happened When

2019：: CSSC was originally formed through the consolidation of China CSSC Holdings and CSIC.

June 2021：: CSSC promised in a letter that it would avoid competition with CSSC Offshore and Marine Engineering Group Co. Ltd. (COMEC) over the next five years through means such as asset reorganization and equity swap.

End of June 2024：: The Newbuild Price Index published by shipping consultancy Clarkson rose to 187.23.

Monday, September 2, 2024：: China CSSC Holdings’ stock fell 9% to 34.9 yuan per share, giving it a market capitalization of 156.1 billion yuan. CSIC's shares dropped 6.4% to 4.98 yuan, giving it a market capitalization of 113.6 billion yuan.

Tuesday, September 3, 2024：: China CSSC Holdings announced plans to absorb China Shipbuilding Industry Co. Ltd. (CSIC) by issuing A-shares to the latter’s stockholders. Both companies halted trading on the Shanghai Stock Exchange to prepare for the merger. The suspension is expected to end within 10 trading days.

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