TOKYO–JFE Holdings Inc. (5411.TO) and IHI Corp. (7013.TO) on Tuesday said they will proceed with a Jan. 1 merger of their shipbuilding operations, finally winning approval from Chinese antitrust authorities after repeated delays.
While it isn’t the first time Chinese authorities have been the last to approve a Japan-linked merger, bankers have expressed concern that certain deals appear to have been held up amid tense relations between the two countries over a territorial dispute. The latest case is the first prominent deal to win approval from China after the flare-up of the diplomatic standoff in September.
JFE and IHI didn’t identify the country in the press release, but a person with knowledge of the merger process previously said tardiness in getting the green light from Chinese authorities was the reason for the delay.
The merger was originally scheduled to take effect Oct. 1, but was delayed in mid-September to Nov. 1 and then to Dec. 1. Last month, the two companies set a new target date of Jan. 1, 2013.
Japan’s shipbuilders have been suffering amid competition from South Korean and Chinese rivals, and the merger was seen as a step toward making them more competitive.
Other deals continue to await approval from Chinese regulators, including a planned purchase of the U.K’s Aegis Group PLC (AGS.LN) by Japanese advertising firm Dentsu Inc. (4324.TO).
By Kana Inagaki. (c) 2012 Dow Jones & Company, Inc.
Cover photo via Shutterstock