World's fourth-largest shipper created after tie-up of Cosco and China Shipping
The State Council has approved the merger of the two biggest shipping conglomerates, China Ocean Shipping (Group) (Cosco) and China Shipping Group, in the government's latest effort to make the industry more competitive globally.
The combined entity would become the world's fourth-largest container shipper, with a market share of roughly 8.1 per cent. That would be far behind AP Moeller-Maersk, Mediterranean Shipping and CMA CGM.
Denmark's Maersk warned last month that global demand for container transport this year would grow at a slower pace than previously expected.
"With the approval of the State Council, Cosco and China Shipping will be restructured," the state asset supervisor said on its website yesterday, using a phrase commonly understood to refer to the merger. It gave no other details.
A listed unit of China Shipping, China Shipping Network Technology, said in a stock exchange filing that the merger would focus on freight transport, container shipping and oil transport services.
The listed unit also said its shares would resume trading on the Shenzhen Stock Exchange on Monday.
Trading in the shares of the listed units of the two state conglomerates, including Cosco's flagship China Cosco and China Shipping's China Shipping Development, had been halted since August 10.
No company representatives were immediately available for comment.
Collectively, Cosco and China Shipping control 488 billion yuan (HK$587.6 billion) in assets, Barclays analysts have estimated.
The merger also represents a massive reshuffling of central government-controlled assets just as consolidation of the country's state-owned industry gathers momentum.
Premier Li Keqiang said last week that the government would spend the next two years dealing ruthlessly with overcapacity, with permanent loss-making companies going "under the knife".
Profits earned by the mainland's industrial companies fell 4.6 per cent in October on the year, declining for a fifth month, the National Bureau of Statistics said last month.
For central government-controlled state conglomerates, profits for the first 10 months of the year dropped 11.3 per cent, the Ministry of Finance said.
The government already has driven the mergers of its two biggest nuclear power firms and top two trainmakers. Government regulators this week announced that Minmetals Corp of China would take control of Metallurgical Corp of China, which builds and designs mining and plant equipment.