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Regional competition forces IHI and Universal to merge

Regional competition forces IHI and Universal to merge

Tokyo: IHI Corp., Japan's third-biggest heavy-machinery maker, has said it's in talks with JFE Holdings Inc., the nation's second-biggest steelmaker, to create the biggest Japanese shipbuilder to compete against Asian rivals.

The two units could be merged as early as this year creating a company with sales of ¥345bn. IHI Marine United would be merged into Universal Shipbuilding, which JFE is currently seeking to raise its stake in from 50% to 80%, buying out part of Hitachi Zosen's 50% share.

"We need to have a clear vision on the business before Chinese shipbuilders' expected rise on the global market, expected in around 2012," a spokesman told Reuters.

"Japanese shipbuilders need to merge and become bigger to compete against South Korea and China," said Cho In Karp, a Seoul-based analyst at Good Morning Shinhan Securities Co, Bloomberg reported.  [14/01/08]