HD Hyundai has recently been accelerating its group restructuring, pursuing large-scale mergers in its core businesses such as shipbuilding and construction machinery. Amid amplifying global uncertainties, including U.S.-originated trade conflicts and China-originated oversupply, analysts suggest that the company is undertaking ‘major surgery’ to maximize its global competitiveness to overcome crises and seize opportunities.

On Sept. 16, HD Hyundai Construction Equipment and HD Hyundai Infracore, subsidiaries of HD Hyundai’s construction machinery division, held extraordinary shareholders’ meetings and approved their merger plans. Accordingly, after a stock purchase claim period until Oct. 10, the two companies will launch as the merged entity HD Construction Machinery in January next year, creating Korea’s largest construction machinery company.

HD Hyundai plans to enhance the fundamental competitiveness of its business by unifying the governance structure of the construction machinery sector through this merger. After the launch of HD Construction Machinery, the governance structure of HD Hyundai’s construction machinery division will be streamlined to HD Hyundai (holding company) → HD Hyundai XiteSolution (intermediate holding company) → HD Construction Machinery. HD Hyundai XiteSolution will continue its role as an intermediate holding company in the construction machinery sector. HD Hyundai XiteSolution operates its own manufacturing business, including forklifts, and manages the research and development (R&D) functions of the construction machinery division. Currently, the shareholding ratio of HD Hyundai’s special related parties, including HD Hyundai XiteSolution, is 41.06% for HD Hyundai Construction Equipment and 34.88% for HD Hyundai Infracore.

Currently, HD Hyundai Infracore ranks 21st and HD Hyundai Construction Equipment 25th in terms of the global construction machinery market share. The merged entity is expected to rise to the 12th-13th position in terms of market share. HD Construction Machinery aims to achieve sales of 14.8 trillion won or more by 2030, a level equivalent to the global top 10, through balanced growth across all business areas including its main business of construction equipment, engines, and aftermarket (AM).

HD Hyundai is also pursuing the merger of HD Hyundai Heavy Industries and HD Hyundai Mipo, shipbuilding affiliates that will play a key role in the “MASGA (Make American Shipbuilding Great Again)” project for U.S.-Korea shipbuilding cooperation. HD Hyundai Heavy Industries, HD Hyundai Mipo, and HD Hyundai’s shipbuilding intermediate holding company, HD Korea Shipbuilding & Offshore Engineering, each held board meetings on Aug. 27 and resolved on the merger between HD Hyundai Heavy Industries and HD Hyundai Mipo. The merger will be carried out with HD Hyundai Heavy Industries absorbing HD Hyundai Mipo.

HD Hyundai explained that the merger of the two companies is a decision to maximize synergy through quantitative and qualitative expansion. In particular, as the MASGA project is about to begin in earnest, HD Hyundai Heavy Industries, whose domestic defense-dedicated docks are at full capacity, will be able to utilize HD Hyundai Mipo’s small and medium-sized docks and facilities, thus establishing a foundation to respond to the expected increase in U.S.-originated demand.

Moreover, it is expected that enhanced competitiveness can be secured in the special-purpose vessel market, such as icebreakers, where demand is expanding globally. It is known that the company plans to upgrade two of HD Hyundai Mipo’s docks to be capable of building special ships as well.

HD Hyundai Heavy Industries, which will become the integrated corporation, also plans to establish an investment corporation in Singapore in December to professionally manage the general commercial vessel construction business. The governance structure will be organized as HD Hyundai (holding company) → HD Korea Shipbuilding & Offshore Engineering (intermediate holding company) → HD Hyundai Heavy Industries (merged entity) → Singapore investment corporation. The investment amount, method, and schedule will be determined by future board resolutions. The Singapore corporation is expected to play a hub role in managing overseas production bases such as HD Hyundai Vietnam Shipbuilding, HD Hyundai Heavy Industries Philippines, and HD Hyundai Vina, while overseeing overseas business including discovering new yards and business cooperation.
Source: Business Korea