Japan's JFE, IHI in talks to merge shipbuilding

TOKYO, Jan 11 (Reuters) - Japanese JFE Holdings Inc (5411.T) and IHI Corp (7013.T) are in talks to merge their shipbuilding operations as early as this year to create the country's largest shipbuilder, the Nikkei business daily reported on Friday.

The two companies are looking to consolidate their shipbuilding units via Universal Shipbuilding Corp, a 50-50 joint venture of JFE and Hitachi Zosen Corp (7004.T), the Nikkei said.

JFE recently reached a basic agreement with Hitachi Zosen to increase its stake in Universal Shipbuilding to around 80 percent, it said.

That allowed JFE to proceed with negotiations with IHI on a merger of Universal Shipbuilding and IHI's shipbuilding unit IHI Marine United Inc, the Nikkei said.

The merger would create a shipbuilder with combined sales of about 345 billion yen ($3.15 billion) based on current full-year projections, with total annual production of about 3 million tons, exceeding those of the industry leader Imabari Shipbuilding Co, the paper said. ($1=109.39 Yen; Editing by Mike Miller) (Reporting by Taiga Uranaka)