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Tokyo - Shares in Japan's Mitsui Engineering & Shipbuilding surged Monday following a report that it had started merger talks with Kawasaki Heavy Industries.
The leading Nikkei business daily said a merger between the shipbuilders would create a firm with almost ¥2.0 trillion ($20 billion) in annual sales, putting it in second spot behind Japan's Mitsubishi Heavy Industries.
Mitsui Engineering's shares surged on the report, closing 13.01% higher at ¥191 while Kawasaki Heavy's shares advanced 1.80% in morning trade before reversing course and closing out the day 0.90%t lower at ¥330.
Earlier Monday, the Tokyo Stock Exchange temporarily suspended trading in the firms "to confirm whether the report is true or not", it said in a statement.
However, both firms dismissed the Nikkei report with Kawasaki saying: "This is not what we have announced and there is no truth to the report."
Minutes later, Mitsui issued a similar statement, saying "this is not what we have announced".
The Nikkei, without citing sources, said the firms will create a new company during the fiscal year ending March 2015 at the earliest in a bid to boost their flagging businesses by cutting procurement costs and boosting research and development.
