Samsung Heavy Industries (SHI) has announced it is to merge with engineering, procurement and project management firm Samsung Engineering on 1 December for around $2.5bn, as offshore takes the fore in future business plans.

Decided during board meeting on 1 September, the merger ratio of 1:2.36 will see SHI issue fresh stock allowing Samsung Engineering shareholders to trade each of their shares for 2.36 SHI shares. A special shareholders meetings are planned on 27 October at both companies, with the merger expected to completed on 1 December.

The merger will enable Samsung Engineering to expand its focus beyond its usual onshore hydrocarbon plants into offshore installations as well as onshore LNG using SHI's expertise.

SHI's current order backlog of $37bn is 70% offshore and 30% shipbuilding, with drilling rigs and production facilities account for around 35% each and LNG carriers accounting for 17%, more than container ships, tankers and other ships combined. The company's $14.8bn revenues were split 35% shipbuilding to 62% offshore in 2013.

Offshore is marked as SHI's growth engine for the future, with stable growth expected at its shipbuilding division. By 2020 the company expects 50% of its revenues to come from offshore, 20% from shipbuilding and 30% from heavy electric machinery, an area that includes wind power and specialised robots and is currently regarded as "seeds for the future."

Samsung Engineering's backlog is dominated by power, petrochemical, refineries and non-hydrocarbon, with a growing interest in gas and upstream.

"The two companies will be reborn as the world's most competitive plant company based on our world-class manufacturing facilities, fabrication experience, and outstanding technical manpower in the onshore and offshore businesses," said Dae-young Park, president and ceo of SHI.

Choong Heum Park, president and ceo of Samsung Engineering, added, "We will emerge as a total solution provider that caters to the diverse needs of our clients by combining the expertise and technologies we have each accumulated as individual companies in the plant, shipbuilding, and offshore industries."