(Yicai) Sept. 3 -- Two units of China State Shipbuilding Corporation, the country’s largest shipbuilding conglomerate, plan to merge in a share swap deal that is expected to bring radical change to the global industry.

China CSSC Holdings will absorb China Shipbuilding Industry Corporation by issuing shares to all of that smaller unit’s investors, the former said yesterday. The merger is intended to streamline their overlapping operations, particularly in the shipbuilding assembly business, and to address competition within the group.

The new entity will be a global leader in terms of assets, revenue, and order backlog, cementing China’s position as the world’s largest shipbuilding nation, according to industry insiders.

The planned combination of CSSC Holdings and CSIC is part of a broader trend in China of consolidating state-owned enterprises to enhance their competitiveness on the global stage.

Trading in the shares of both units has been halted from today for up to 10 days. CSSC Holdings [SHA: 600150] closed 9 percent down at CNY34.90 (USD4.90) yesterday, giving it a market capitalization of CNY113.6 billion (USD16 billion), while CSIC [SHA: 601989] fell 6.4 percent to CNY4.98 (70 US cents), with a market value of CNY156.1 billion.

CSSC Holdings focuses on the large-scale shipbuilding, repair, electromechanical equipment, and marine engineering businesses. It has four subsidiaries: Jiangnan Shipyard Group, Shanghai Waigaoqiao Shipbuilding, CSSC Chengxi Shipyard, and Guangzhou Shipyard International.

In the first half of the year, CSSC Holdings reported CNY1.4 billion (USD196.6 million) in net profit and CNY36 billion (USD5.1 billion) in revenue, up 155 percent and 18 percent, respectively, from a year earlier.

CSIC focuses on the research, design, and manufacturing of marine defense, transport, research, and development equipment. Its net profit surged 177 percent to CNY532 million (USD74.7 million) in the six months ended June 30 from a year earlier, while revenue jumped 31 percent to CNY22.1 billion.

Editor: Futura Costaglione