HD Hyundai Heavy to merge with affiliate HD Hyundai Mipo

South Korea's HD Hyundai Heavy Industries, the world's biggest shipbuilder, said on Wednesday that it plans to merge with its affiliate HD Hyundai Mipo as it targets a bigger slice of the US shipbuilding market.

With the merger, the company said it aims to lead US-Korea shipbuilding cooperation projects touted during a recent summit between the leaders of the countries that Seoul has dubbed "Make American Shipbuilding Great Again."

"Ahead of the full-scale launch of the MASGA project following the Korea-US summit and as countries around the world are strengthening naval power, demand for K-defence is expected to increase further," the company said in a statement.

The deal proposed an exchange ratio of one HD Hyundai Mipo share for every 1.04059146 HD Hyundai Heavy shares, the companies said in filings.

The merged company will be launched in December.

Ahead of the announcement, shares of HD Hyundai Heavy Industries surged 11.3 per cent and HD Hyundai Mipo jumped 14.6 per cent to close at record highs, while other shipbuilding stocks also rallied on hopes around the MASGA project.

(Editing by Heejin Kim and Hyunjoo Jin; Additional reporting by Jihoon Lee Editing by Ed Davies)