Mitsui Engineering Tells Shareholders Merger Remains an OptionMasumi Suga
Mitsui Engineering & Shipbuilding Co., the most reliant of Japan’s heavy machinery makers on shipbuilding for sales, would consider a merger even after talks to combine with Kawasaki Heavy Industries Ltd. fell apart, the company’s outgoing president told shareholders.
Yasuhiko Katoh, who was appointed chairman after the shipbuilder’s annual general meeting in Tokyo yesterday, said a combination of some sort is an option though the company could still remain independent, according to Yoshio Honda, 71, one of 223 investors who attended the meeting. Kawasaki Heavy’s decision to call off a merger was “regrettable,” Katoh said.
A deal with Kawasaki Heavy would have created a company with sales of 1.9 trillion yen ($19.4 billion), narrowing the gap with Japan’s top maker of heavy machinery, Mitsubishi Heavy Industries Ltd. The break-up with Kawasaki leaves Mitsui with shipbuilding operations accounting for more than half its total revenue in an unprofitable market where domestic yards have lost market share to lower-cost rivals in China and South Korea.
“I wanted to hear more concrete explanation from the management about how the company will promote non-shipbuilding operations,” Kazuki Sai, another shareholder who joined yesterday’s meeting, said in an interview. “The meeting was disappointing.”
Katoh told investors the company would consider every possibility to boost competitiveness, including an alliance with others, a merger or an acquisition, Masahiro Takaoka, a spokesman for Mitsui Engineering, said yesterday by phone. New President Takao Tanaka will unveil a mid-term business plan later today.
Kawasaki Heavy, which makes everything from ships and high-speed trains to Ninja racing bikes, dismissed Satoshi Hasegawa as president on June 13 and said it terminated merger talks with Tokyo-based Mitsui Engineering, two months after denying the two companies were in negotiation to combine.
Mitsui Engineering reported its first annual loss in 11 year in the financial year ended March 31 due to a 24 billion yen impairment charge. It forecast net income of 5 billion yen this year, while operating profit may fall 42 percent.
The shares yesterday gained 2.9 percent to 142 yen in Tokyo. The stock has risen 7.6 percent this year, underperforming a 27 percent advance in the Nikkei 225 Stock Average.