China State Shipbuilding Corporation (CSSC) and China Shipbuilding Heavy Industry Corporation (CSIC) recently released announcements disclosing the latest progress of their merger. The two sides have provided detailed responses to the exchange’s inquiries and improved relevant restructuring documents, pushing the merger process forward.
This transaction reorganized and integrated CSSC and CSIC through a share-exchange merger. Specifically, CSSC absorbed and merged CSIC by issuing A shares to all CSIC exchange shareholders. CSSC was the absorbing and merging party, and CSIC was the absorbed and merged party, that is, CSSC issued A shares to all CSIC exchange shareholders in exchange for the CSIC shares held by such shareholders.
Upon completion of the merger, CSIC will be delisted and its legal status will be revoked. CSSC will assume and take over all of CSIC’s assets, liabilities, businesses, personnel, contracts, and all other rights and obligations. The A-shares issued by CSSC as a result of this share exchange merger will be listed and traded on the main board of the Shanghai Stock Exchange.
Regarding the exchange price and exchange ratio, the exchange price of CSSC is 37.84 yuan/share, the exchange price of CSIC is 5.05 yuan/share, and the exchange ratio is 1:0.1335. After the implementation of the 2024 profit distribution, the exchange price of CSSC will be adjusted to 37.59 yuan/share, the exchange price of CSIC will be adjusted to 5.032 yuan/share, and the exchange ratio will be adjusted to 1:0.1339.
Since the actual controllers of both CSSC, the absorbing party, and CSIC, the absorbed party, are CSSC Group, this merger constitutes a related party transaction.
This transaction constitutes a major asset reorganization of CSSC and CSIC. The transaction amount of the assets that CSSC intends to purchase is the transaction amount of the share exchange and absorption merger of CSIC (transaction amount = CSIC share exchange price × CSIC total share capital), which is 115,150,278,400 yuan, exceeding 50% of its total assets, operating income, and net assets in 2023. The transaction amount of CSIC also exceeds 50% of its total assets, operating income, and net assets in 2023.
The restructuring and integration of CSSC and CSIC aims to improve the operating quality of the listed company and enhance its core functions and competitiveness by consolidating the shipbuilding and repair businesses of CSSC and CSIC into CSSC. The transaction will promote the professional integration of the two parties, leverage synergies, focus on value creation, improve operating efficiency, enhance brand premium and achieve complementary advantages.
At present, the shipping industry as a whole has entered a new round of economic boom cycle, shipping demand and prices have fully recovered, the three major shipbuilding indicators have increased, and the major shipyards under CSSC and CSIC have full orders on hand, and production orders have been scheduled until 2029.
This transaction conforms to the industry cycle and seizes industry opportunities, integrates the advantageous scientific research, production and management resources of CSSC and CSIC and the key links of the industrial chain and supply chain, promotes the professional, systematic and coordinated development of subordinate enterprises, and promotes the gathering of advanced production factors of shipbuilding and repair to the development of new quality productivity of the shipbuilding industry. It focuses on strengthening core functions and enhancing core competitiveness, continuously improving the international competitiveness of the shipbuilding and offshore engineering industry, and building a world-class shipbuilding enterprise.