Japanese shipbuilders Mitsui E&S Shipbuilding Co. and Tsuneishi Shipbuilding have agreed on the main terms and conditions of a business tie-up further driving consolidation in the sector.
Mitsui announced plans to split its naval ship business and merchant shipbuilding business as part of its Mid-Term Business Plan 2020.
The plan is focusing on withdrawing from unprofitable businesses and improving the group’s financial position. It is being implemented in response to losses from large overseas EPC projects in the engineering business, as well as deteriorating profits in shipbuilding and engineering.
As a result, Mitsubishi Heavy Industries (MHI) and Tsuneishi Shipbuilding have agreed on the basic terms of establishing new businesses in the merchant shipbuilding, targeting domestic and international markets.
Under the deal, set to be concluded by the end of March 2021, Mitsui E&S Holdings will transfer 49% of the total number of issued shares of its merchant shipbuilding to the new business, which will be majority-owned by Tsuneishi.
Separately, MHI has reached a final agreement with Mitsui E&S Holdings to take over the naval and governmental ships business.
Mitsui E&S Shipbuilding has strengths in the construction and repair of auxiliary ships, including supply ships and oceanographic survey ships for Japan’s Ministry of Defense, as well as governmental ships. In recent years the company has also been actively developing new technologies incorporated into autonomous underwater vehicles (AUV) and autonomous surface vehicles (ASV).
On the other hand, MHI undertakes comprehensive operations in diverse systems and equipment for land, sea and air defense, and develops, designs and constructs naval vessels.
The company also offers full maintenance and repair services for naval vessels.
Under the newly signed agreement, MHI will take over the entirety of Mitsui E&S Shipbuilding’s operations in naval and governmental ships, including AUVs and ASVs. MHI will function as an operating company, with operation of the latter’s Tamano Works to continue.
Following the requisite reviews by the Fair Trade Commission and other pertinent authorities, the transfer of operations is targeted for completion in October 2021.