**HD Hyundai Heavy Industries Launch in December**
**Merger of Top Large and Medium Shipyards**
– 1 MiPo Shipyard stock converts to 0.4059146 Heavy Industries stock
– 10 trillion KRW annual defense sales target by 2035
– HD Hyundai aims to enhance U.S. MRO competitiveness
*Ahead of the Korea-U.S. shipbuilding cooperation project ‘MASGA’ launch, HD Korea Shipbuilding & Offshore Engineering, a core subsidiary of HD Hyundai, is reorganizing its business. By merging two of its three shipbuilding affiliates (HD Hyundai Heavy Industries and HD Hyundai Mipo Dockyard), the company aims to strengthen its global competitiveness in the shipbuilding and defense sectors through economies of scale.*
HD Hyundai plans to merge its shipyards, HD Hyundai Heavy Industries and HD Hyundai Mipo. The MASGA project, designed to bolster shipbuilding collaboration between Korea and the U.S., is set to kick off, prompting the move towards larger-scale operations for increased overseas orders and enhanced competitiveness in U.S. Navy maintenance and repair (MRO).
On the 27th, HD Korea Shipbuilding & Offshore Engineering, HD Hyundai Heavy Industries, and HD Hyundai Mipo announced they each held board meetings and passed resolutions to merge HD Hyundai Heavy Industries and HD Hyundai Mipo. Following extraordinary general meetings of shareholders and a merger review by the Fair Trade Commission, the integrated HD Hyundai Heavy Industries will be established by December. Shareholders of HD Hyundai Mipo will receive 0.4059146 new shares of HD Hyundai Heavy Industries for each share they hold in HD Hyundai Mipo.
For HD Hyundai, the business overhaul aims to secure a competitive edge in the global shipbuilding market through both quantitative and qualitative expansion. Notably, China has also merged its top two shipbuilders (CSSC and CSIC) to enhance competitiveness. An HD Hyundai representative noted that merging HD Hyundai Mipo, the world’s leading medium-sized shipbuilder, with HD Hyundai Heavy Industries, the leading large vessel shipbuilder, enables responsiveness to diverse demands.
The merger is expected to enhance competitiveness, especially in the defense sector, including U.S. Navy MRO. HD Hyundai Heavy Industries has extensive experience in constructing and exporting naval ships domestically. It has already signed an MSRA (Master Ship Repair Agreement) with the U.S. Navy’s Supply Corps, securing maintenance projects like the regular maintenance of the U.S. Navy’s 7th Fleet’s ship, the ‘Alan Shepard’, earlier this month. The integration of HD Hyundai Mipo’s medium-sized ship production facilities and personnel with HD Hyundai Heavy Industries will facilitate efficient construction of naval ships similar in size to medium vessels. The integrated HD Hyundai Heavy Industries aims to achieve 10 trillion KRW in annual defense sales by 2035. Furthermore, it plans to venture into niche markets like icebreakers, which face increasing demand due to Arctic development.
Additionally, HD Korea Shipbuilding & Offshore Engineering announced the establishment of an investment corporation to manage overseas shipbuilding businesses alongside the integrated HD Hyundai Heavy Industries. Set to launch this December in Singapore, the corporation will oversee production bases in Vietnam and the Philippines, such as HD Hyundai Vietnam Shipbuilding and HD Hyundai Vina (provisional name). Prior to this, HD Korea Shipbuilding & Offshore Engineering acquired Doosan Enerbility’s Vietnamese subsidiary ‘Doosan Vina’ on the 20th. An HD Korea Shipbuilding & Offshore Engineering representative stated, “This business restructuring was strategically devised to target ‘broader markets’ and ‘stronger shipbuilding’,” adding that “the launch of the integrated corporation will expand markets and secure leading-edge technologies to steer the future shipbuilding market.”