CSSC To Become World’s Largest Shipbuilder After Mega Merger

China State Shipbuilding Corporation Limited (CSSC) has received approval from the Shanghai Stock Exchange to absorb China Shipbuilding Industry Company Limited (CSIC) in a massive deal valued at 115.2 billion yuan, or about USD 16 billion. This will be the largest absorption merger ever recorded in China’s A-share market.

According to the plan, CSSC will issue new A-shares to all CSIC shareholders in exchange for their current holdings. The exchange ratio values CSIC shares at 5.032 yuan each and CSSC shares at 37.59 yuan, which means one CSIC share will be swapped for 0.1339 CSSC share.

Once the merger is completed, CSIC will be officially delisted. CSSC will take over all of CSIC’s assets, contracts, debts, and employees. The merged company will continue under the CSSC name.

However, the transaction still requires registration with the China Securities Regulatory Commission and other necessary procedural approvals before it becomes fully effective. This merger is part of China’s effort to consolidate its shipbuilding sector.

Back in 2019, the Chinese government combined the former “South Ship” (China State Shipbuilding Corporation) and “North Ship” (China Shipbuilding Industry Corporation) into one parent company, China State Shipbuilding Group. Both CSSC and CSIC are subsidiaries under this group, which is now the world’s largest shipbuilding conglomerate.

With this merger, China aims to remove internal competition between CSSC and CSIC, especially in shipbuilding and repair work. The integration also supports the country’s goal to modernise and strengthen its naval capabilities.

The parent group has also promised to reduce overlap by transferring assets from Hudong-Zhonghua, one of its top shipyards, into CSSC within three years.

In 2024, CSSC secured orders for 154 ships, totaling 12.72 million deadweight tons. CSIC booked 103 ships, totaling 15.89 million deadweight tons. Together, the two companies accounted for 257 new ship orders, or 28.61 million deadweight tons, nearly 17% of all global ship orders that year, based on data from Clarksons.

Following the merger, China State Shipbuilding Group will remain the controlling shareholder with around 49% ownership in the new entity. The merged company is expected to hold total assets of about 400 billion yuan (USD 56 billion) and generate annual revenue of roughly 130 billion yuan, according to maritime analysts at Alphaliner.

References: jiemian, shippingherald

Source: Maritime Shipping News