South Korea’s largest shipbuilding group HD Hyundai has decided to merge its two major shipbuilding subsidiaries, HD Hyundai Heavy Industries and HD Hyundai Mipo. This is the first large-scale restructuring since the establishment of HD Korea Shipbuilding & Offshore Engineering (HD KSOE), an intermediate holding company for the shipbuilding business, in 2019.
HD Hyundai Umiura to be merged into HD Hyundai Heavy Industries
HD Hyundai emphasized that the move aims to integrate its shipbuilding resources, expand the defense market, and comply with the “Make American Shipbuilding Great Again (MASGA)” initiative.
On August 27, HD Hyundai Heavy Industries held a board meeting and approved a merger plan with HD Hyundai Mipo. HD Hyundai Mipo will be integrated into HD Hyundai Heavy Industries, with the merged company expected to be officially established in December 2025. The new company has set a goal of achieving annual defense revenue exceeding 10 trillion won by 2035, ten times the current annual revenue of 1 trillion won.
It is reported that the merger will be carried out by issuing new shares of the surviving company to the shareholders of HD Hyundai Mipo. According to the merger ratio, 0.4059146 shares of HD Hyundai Heavy Industries common stock will be distributed for each share of HD Hyundai Mipo common stock held.
This restructuring marks HD Hyundai’s first major business restructuring since 2019. Previously, HD Hyundai established HD KSOE, an intermediate holding company for its shipbuilding business, to restructure its structure in preparation for its acquisition of Daewoo Shipbuilding & Marine Engineering. Although the acquisition of Daewoo Shipbuilding & Marine Engineering ultimately fell through, HD KSOE has continued to serve as the “control tower” for HD Hyundai’s subsidiaries, overseeing strategic planning and investment.
Through this business restructuring, HD KSOE will integrate the operational strengths of HD Hyundai Heavy Industries and HD Hyundai Mipo, ensuring global market competitiveness while further expanding its defense business portfolio.
HD Hyundai Mipo specializes in medium-sized shipbuilding, while HD Hyundai Heavy Industries focuses on large and specialized vessels. The merger is expected to enhance overall strength and expand the market. In particular, given the recent launch of the Korea-US shipbuilding partnership project, “MASGA,” Korean media report that the combined entity will significantly enhance its competitiveness through economies of scale and technological integration.
As the South Korean shipbuilding enterprise with the most naval vessel construction and export records domestically (a total of 106 naval vessels, including 88 delivered to the domestic market and 18 exported overseas), HD Hyundai Heavy Industries boasts solid technical capabilities and professional experience. On this occasion, it will integrate the advantageous dock scale, equipment, and outstanding talent resources of HD Hyundai Mipo Dockyard in the field of naval vessel construction, aiming to quickly seize the opportunities brought by the surging global defense market.
Additionally, the merged HD Hyundai Heavy Industries plans to leverage both companies’ extensive track record in specialized vessels such as icebreakers to seize market opportunities arising from growing demand for Arctic development.
The merger of the two companies will also benefit HD Hyundai in managing its global business bases. HD Hyundai’s overseas bases are currently expanding, including HD Hyundai Vietnam Shipbuilding, in which HD Hyundai Mipo holds a 55% stake; HD Hyundai Vinashin (tentative name), which HD KSOE recently decided to acquire; and HD Hyundai Heavy Industries’ Philippine base, which it operates through a lease at the Subic Shipyard in the Philippines.
To achieve integrated management, HD KSOE will establish an investment entity in Singapore with HD Hyundai Heavy Industries to manage overseas shipbuilding operations. This entity will serve as a hub for coordinating overseas business and plans to expand its commercial ship market share by leveraging competitive overseas shipyards.
In the future, the newly merged company and HD KSOE will mutually transfer their respective holdings in overseas subsidiaries. Upon completion of the equity restructuring, HD KSOE is expected to hold a 60% stake in the Singapore investment entity, while the newly integrated HD Hyundai Heavy Industries will hold the remaining 40%.
A representative of HD KSOE stated, “This business merger is a strategic consideration based on the goals of ‘expanding a broader market’ and ‘building a stronger shipbuilding industry,’” and emphasized that “through the establishment of the integrated company, we will achieve market expansion and advanced technology reserves, leading the future development of the shipbuilding market.”
Additionally, industry analysts in South Korea believe that the merger of HD Hyundai Heavy Industries and HD Hyundai Mipo aims to proactively respond to the officially launched Korea-U.S. shipbuilding cooperation project “MASGA.” This move will serve as a crucial foundation for HD KSOE to secure naval vessel orders released through the MASGA project.
HD Hyundai Heavy Industries and HD Hyundai Mipo, which HD Hyundai has decided to merge, are Korea’s leading shipbuilders, ranking first and fifteenth globally respectively based on their order backlogs.
HD Hyundai Heavy Industries was founded in 1972. Construction of the shipyard took two years, and the company successfully delivered two oil tankers in 1974. In 1980, HD Hyundai Heavy Industries successfully built South Korea’s first destroyer, the Ulsan. Entering the 1990s, HD Hyundai Heavy Industries secured a string of orders for high-value-added vessels, including LNG carriers, ultra-large container ships, and offshore drilling platforms, surpassing Japanese companies, which dominated the global shipbuilding market at the time, to become the world’s leading shipbuilder.
In 2019, following a restructuring of the parent company’s organizational framework, HD Hyundai Heavy Industries was integrated into the shipbuilding and offshore business subsidiary system with HD KSOE as the intermediate holding company. Today, leveraging its global shipbuilding base in Ulsan, HD Hyundai Heavy Industries possesses strong competitiveness in the markets for LNG carriers, LNG-fueled vessels, and ammonia-fueled vessels.
The other shipbuilding company involved in this merger, HD Hyundai Mipo Dockyard, was established in 1974 as the ship repair division of HD Hyundai Heavy Industries. It became an independent legal entity the following year (1975) and rapidly grew into the world’s largest ship repair base.
In the 1990s, HD Hyundai Mipo transformed into a new shipbuilding enterprise specializing in medium-sized vessels. In 1996, the company established a joint venture shipyard, HD Hyundai Vietnam Shipbuilding, with a Vietnamese state-owned enterprise. Initially focused on ship repair and conversion services, it expanded into new shipbuilding in the late 2000s and has since secured orders for over 200 vessels.