Kawasaki Heavy Industries Ltd. and Mitsui Engineering & Shipbuilding Co. began preliminary discussion on potential business integration, Japan Times reported.
The two companies are expected to take multiple integration formats into consideration, including an outright merger. But sources told Japan Times that some wariness remains within the firms about any form of integration that could cause the talks to undergo several twists and turns.
Integration would attempt to place the companies closer to their Asian rivals in terms of orders, an area many Japan shipbuilders have been lagging in during the industry’s hard times.
“If the integration goes through, it will create a giant in the shipbuilding-heavy machinery industry whose aggregate consolidated sales will eclipse ¥1.8 trillion, second only to Mitsubishi Heavy Industries Ltd., which has sales of ¥3 trillion,” Japan Times said.
“Kawasaki Heavy is forecast to have posted ¥1.3 trillion in group sales in the business year to March 31 against ¥577 billion expected to have been earned by Mitsui Engineering.”