HD Hyundai Heavy Industries has decided to bring HD Hyundai Mipo (HMD) into its corporate structure fold. HD Hyundai Heavy Industries said on Aug. 27 the shipbuilder will effectively respond to changes of the shipbuilding industry by merging technology, manpower and resources with HMD.
HD Korea Shipbuilding & Offshore Engineering Co. (HDKSOE), HD Hyundai Heavy Industries and HMD each held a directors’ meetings to approve the merger.
Newly issued shares of HD Hyundai Heavy Industries are to be issued to HMD shares. Each HMD common share will be exchanged with 0.4 common shares of HD Hyundai Heavy Industries.
Currently, the biggest shareholder of HD Hyundai Heavy Industries is HDKSOE, which owns a 74.18 percent of the common shares of HD Hyundai Heavy Industries.
The biggest shareholder of HMD is also HDKSOE, which has a 42.4 percent share of the former’s shares.
A whole view of the shipyard of HD Hyundai Heavy Industries.
A view of the shipyard of Hyundai HD Hyundai Mipo.
The holdings of the biggest shareholders and specially related party shares will decline from 74.18 percent to 69.29 percent following the merger.
The merged HD Hyundai Heavy Industries will be launched in December following an upcoming extraordinary shareholders’ meetings and corporate consolidation review.
HD Hyundai Group said, “The merger is a strategic measure to secure an absolute upper hand over the competition in the increasingly competitive global market by not only expanding and diversifying the market through maximization of synergetic effects through quantitative and qualitative enlargement but also developing advanced technologies in advance.”
No. 1 and No. 2 shipbuilders in China and Japan, Korea’s rival countries, have already wrapped up consolidation among themselves.
HD Hyundai said the launch of the merged HD Hyundai Heavy Industries is expected to raise its comprehensive capabilities and market entry.
The purpose of the merger may be construed by many pundits as HD Hyundai’s bid to accelerate the implementation of the “Make American Shipbuilding Great Again” (MASGA), a Korean-U.S. shipbuilding cooperation project.
The reason is that the merger will allow the maintenance, repair and operation license of U.S. military ships, acquired by HD Hyundai Heavy Industries to expand and enlarge resources and facilities owned by HMD.
In July 2024, HD Hyundai Heavy Industries struck the U.S. Navy Maintenance, Repair, and Overhaul Contract Agreement (MSRA) with the U.S. Naval Supply Systems Command.
Under the deal, HD Hyundai Heavy Industries obtained qualifications to bid for MRO projects for support ships of the U.S. Military Sealift Command (MSC) and combat ships for the next five years.
HDKSOE is to establish an investment entity responsible for the overseas shipbuilding business along with the merged HD Hyundai Heavy Industries.
The corporate entity, to be inaugurated in Singapore in December, will be charged with overseeing the overseas business, such as managing of overseas production centers, such as HD Hyundai Vietnam Shipbuilding Co., HD Hyundai Heavy Industries Philippine and the tentatively named HD Hyundai Vina, exploring of new yards and promoting of business cooperation.
HD Hyundai said, “Overseas business centers will be united into an investment entity in Singapore through the restructuring of the business structure in keeping with the progress of the merger, and we will manage and operate lots of overseas entities in a comprehensive fashion and swiftly and flexibly cope with in the global market.”
In a conference call after the merger with HMD was announced, HD Hyundai Heavy Industries said the merged shipbuilder aims to raise sales from 19 trillion won in 2024 to 32 trillion won in 2030 and 37 trillion won in 2035.
The sales goals factor in that the merged entity will see the defense segment jump 21 percent in the compounded annual growth rate (CAGR), the marine and energy segment surge 13 percent, the commercial ship segment rise 4 percent and the engine sector increase 3 percent.
HD Hyundai Heavy Industries revealed a plan to raise sales in the defense business market to 7 trillion won in 2030 and 10 trillion won in 2035 by landing combat ship, submarine, support ship and unmanned ship orders in the global military ship market, including the United States.
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