A man walks past a signboard of Kawasaki Heavy Industries, Ltd. at the company's Tokyo Head Office in Tokyo April 22, 2013. Image (c) REUTERS/Toru Hanai

A man walks past a signboard of Kawasaki Heavy Industries, Ltd. at the company’s Tokyo Head Office in Tokyo April 22, 2013. Image (c) REUTERS/Toru Hanai

Masumi Suga

June 14 (Bloomberg) — Kawasaki Heavy Industries Ltd., Japan’s second-biggest heavy-equipment maker, removed Satoshi Hasegawa as president as it ended merger talks with Mitsui Engineering & Shipbuilding Co.

Kawasaki Heavy appointed Shigeru Murayama, head of the company’s aerospace business, to the role at a board meeting yesterday, the Kobe-based company said in a statement. Hasegawa had been involved in talks to combine with Mitsui Engineering, Japan’s top maker of marine engines, it said.

Directors at Kawasaki Heavy had disagreed over the potential synergies created by the proposed merger. The collapse of the plan hampers government efforts to reduce the number of Japanese shipbuilders and build their scale as they compete with lower-cost rivals from China and South Korea.

Hasegawa had been president since June 2009. The executive, along with Senior Executive Vice President Mitsutoshi Takao and Senior Vice President Masahiko Hirohata, was demoted to director level and will quit after a shareholder meeting on June 26, Kawasaki Heavy said in the statement.

Calls to Hasegawa weren’t returned.

Kawasaki Heavy closed down 5.3 percent at 306 yen in Tokyo trading yesterday before the announcement was made, paring its gain this year to 32 percent. Mitsui Engineering, which has advanced 9.9 percent this year, fell 6.5 percent to 145 yen.

Heavy-industry companies involved in shipbuilding should team up with domestic competitors and consolidate into three groups to boost scale and offer a wider range, Hidenori Imade, director of the shipbuilding unit at Japan’s Maritime Bureau, said May 10, without identifying any potential combination.

Japan’s biggest heavy-equipment maker is Mitsubishi Heavy Industries Ltd.

Copyright 2013 Bloomberg.

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