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Mitsubishi Heavy Industries Ltd. said Monday that it had clinched a final agreement to acquire Mitsui E&S Shipbuilding Co.’s operations of constructing Defense Ministry ships, including Self-Defense Forces vessels.

Mitsubishi Heavy will also take over Mitsui E&S Shipbuilding’s business for other public-sector ships, such as patrol boats of the Japan Coast Guard. The two companies are aiming to complete the business transfer in October. The value of the deal is estimated to be billions of yen.

The two companies reached a basic agreement on the business transfer in June last year.

The move will make Mitsubishi Heavy and Japan Marine United Corp. the only builders of SDF destroyers. Japan Marine United is partly owned by steelmaking and engineering group JFE Holdings Inc. and heavy machinery maker IHI Corp. Mitsubishi Heavy and Kawasaki Heavy Industries Ltd. are already the only companies that build SDF submarines.

“By taking over the technologies and human resources of Mitsui E&S Shipbuilding, we aim to strengthen our SDF ship business and further contributing to Japan’s maritime security,” Mitsubishi Heavy President Seiji Izumisawa told reporters in Tokyo.

“The deal will help enhance the succession and development of the nation’s shipbuilding techniques and technologies,” Ryoichi Oka, president of Mitsui E&S Holdings Co., the parent of Mitsui E&S Shipbuilding and formerly called Mitsui Engineering & Shipbuilding Co., told reporters.

After the business transfer, Mitsubishi Heavy will continue constructing and repairing SDF vessels at the Mitsui E&S shipyard in the city of Tamano, Okayama Prefecture, where the predecessor of Mitsui Engineering & Shipbuilding was founded. The Mitsui E&S side will continue to own the shipyard and lease it to Mitsubishi Heavy.

About 400 of the some 700 workers at the factory will be transferred to Mitsubishi Heavy, while the rest will be relocated within the Mitsui E&S Holdings group.

Mitsui E&S Holdings is set to terminate commercial ship construction at its Chiba shipyard in the city of Ichihara, Chiba Prefecture, at the end of this month, amid intensifying price competition with Chinese and South Korean shipbuilders.

The group seeks to develop a business model centering on ship engineering, or designing and developing ships, without possessing shipyards.

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