HD Hyundai Heavy Industries Co., the world’s largest shipyard by order volume, will merge with HD Hyundai Mipo Co., the leading builder of medium-sized vessels. The move is intended to expand the merged entity’s defense portfolio and step up participation in the South Korea–United States shipbuilding partnership under the “Make American Shipbuilding Great Again (MASGA)” initiative.

On Aug. 27, the boards of HD Hyundai Heavy Industries and HD Hyundai Mipo, both subsidiaries of HD Korea Shipbuilding & Offshore Engineering Co. (HD KSOE), approved the merger plan. It marks the largest corporate restructuring since HD KSOE was established in 2019 as the intermediate holding company for HD Hyundai’s shipbuilding operations.

The merger underscores HD Hyundai Heavy Industries’ ambition to accelerate its push into defense. Demand for warships is forecast to rise significantly as U.S.–Korea naval cooperation deepens. The U.S. Congressional Budget Office projects the U.S. Navy will require about 300 combat ships and logistics support vessels over the next three decades.

By combining HD Hyundai Heavy’s record as South Korea’s top naval shipbuilder and exporter with HD Hyundai Mipo’s docks and facilities suited for military construction, the company aims to reinforce its capacity to produce warships.

HD Hyundai Heavy Industries is the only South Korean shipbuilder with the ability to both design and build Aegis destroyers, including three Sejong the Great-class (KDX-III) guided missile destroyers for the Korean Navy. It also produced the auxiliary ship “Endeavour,” South Korea’s first exported warship in 1987. Of the 106 naval vessels the company has built and delivered to date, 18 have been exported.

HD Hyundai Mipo, in contrast, has long specialized in medium-sized vessels. Because warships are smaller than ultra-large containerships or liquefied natural gas carriers, its mid-sized docks are well suited for defense production. The shift also reflects the need to diversify, as China has come to dominate the market for medium commercial ships, the company’s core business. The merger is expected to create opportunities in specialized segments such as icebreakers, where demand is growing along Arctic shipping routes.

The integrated HD Hyundai Heavy Industries has set a target of reaching 10 trillion won ($71 billion) in annual defense sales by 2035. Last year, the two companies posted combined revenue of about 18.5 trillion won ($13.3 billion), with defense operations accounting for 1.1447 trillion won ($821 million). The company plans to expand defense into a business line that generates half of total revenue.

Under the terms of the merger, HD Hyundai Mipo shareholders will receive new shares in HD Hyundai Heavy Industries. Each HD Hyundai Mipo common share will be exchanged for 0.4059146 shares of HD Hyundai Heavy Industries.

Separately, HD KSOE said it will set up an overseas investment corporation in Singapore in December with HD Hyundai Heavy Industries. The new entity will oversee shipyards in Vietnam and the Philippines and pursue new growth opportunities. “China and Japan have both consolidated their leading shipbuilders to boost competitiveness,” the company said. “With the launch of an integrated HD Hyundai Heavy Industries, we will secure an edge in the global market.” Source: The Chosun Daily