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Japan shipbuilders to merge

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(Globalpost/GlobalPost)

Shares in Japan's Mitsui Engineering & Shipbuilding surged Monday following a report that it had started merger talks with Kawasaki Heavy Industries.

The leading Nikkei business daily said a merger between the shipbuilders would create a firm with almost 2.0 trillion yen ($20 billion) in annual sales, putting it in second spot behind Japan's Mitsubishi Heavy Industries.

Mitsui Engineering's shares surged on the report, closing 13.01 percent higher at 191 yen while Kawasaki Heavy's shares advanced 1.80 percent in morning trade before reversing course and closing out the day 0.90 percent lower at 330 yen.

Earlier Monday, the Tokyo Stock Exchange temporarily suspended trading in the firms "to confirm whether the report is true or not", it said in a statement.

However, both firms dismissed the Nikkei report with Kawasaki saying: "This is not what we have announced and there is no truth to the report."

Minutes later, Mitsui issued a similar statement, saying "this is not what we have announced".

The Nikkei, without citing sources, said the firms will create a new company during the fiscal year ending March 2015 at the earliest in a bid to boost their flagging businesses by cutting procurement costs and boosting research and development.

kh-pb/dan

http://www.globalpost.com/dispatch/news/afp/130422/japan-shipbuilders-merge