Beijing Gives Green Light for CSSC-CSIC Merger
China's powerful State-Owned Assets Supervision and Administration Commission (SASAC) announced Friday that it has approved the merger of giant state-owned shipbuilders CSSC and CSIC, paving the way for a new mega-company with 21 percent of global sales. The new state enterprise will be called China Shipbuilding Group Corp., and it will be primarily led by CSSC executives, according to Caixin.
"After being approved by the State Council, China State Shipbuilding Corporation Co., Ltd. and China Shipbuilding Industry Corporation Co., Ltd. implemented a joint restructuring," SASAC said in a one-sentence announcement.
The merger restores the previous organizational structure for China's state-owned shipbuilding operations. In 1999, as part of a decentralization and reform initiative, CSSC spun off its northern China operations to create CSIC. Today, CSIC's assets include Dalian Shipyard, Bohai Shipyard, Wuchang Shipyard and a wide variety of associated suppliers, manufacturers and research labs. As of 2017, it had annual sales in the range of $50 billion.
CSSC has been undergoing a series of management changes and restructurings over the past year, leading to rumors that it could be preparing for a merger. In March 2018, it appointed a new leader, CPC Central Committee member Lei Fanpei. In March 2019, it launched a plan to restructure the finances of three of its largest shipyards - Jiangnan, Huangpu Wenchong and Guangzhou - in a debt-for-equity plan with new share issuances. CSIC merged two of its largest yards - Dalian and Bohai - the same month.
Exchange-listed subsidiaries of the two groups announced their plans for a merger in July, marking the first official confirmation of the long-awaited deal. The re-merged company will account for fully half of new orders and repair contracts from Chinese shipowners, along with the bulk of China's naval shipyard activity. It will also provide a counterweight to the expected sale of South Korea's Daewoo Shipbuilding and Marine Engineering to Hyundai Heavy Industries, which - if completed - would give HHI unprecedented scale.