Japan shipbuilder shares jump on merger report

RELATED QUOTES

SymbolPriceChange
KWHIY13.95-0.16
MHVYF5.36-0.14

Shares in Japan's Kawasaki Heavy Industries (Other OTC: KWHIY - news) and Mitsui Engineering & Shipbuilding surged on Monday morning following a report that the shipbuilding giants are starting merger talks.

By the morning break, Mitsui Engineering was up 13.60 percent to 192 yen while Kawasaki Heavy's shares advanced 1.80 percent to 339 yen.

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

However, both firms dismissed the report in the leading Nikkei business daily, 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.

The merged company would have almost 2.0 trillion yen ($20 billion) in annual sales, putting it in second spot behind Japan's Mitsubishi Heavy Industries (Other OTC: MHVYF - news) , it said.