China State Shipbuilding Corp, one of the world's five biggest shipbuilders, will take direct control of Shanghai-listed Hudong Heavy Machinery before its planned US$800 million Hong Kong initial public offering next year.
Hudong Machinery, which has a 60 per cent market share in Chinese production of low-speed diesel engines for ships, said yesterday its two largest shareholders will transfer their combined 53.27 per cent stake to their ultimate parent, State Shipbuilding.
The deal, which has won approval from the China Securities Regulatory Commission and the State-owned Assets Supervision and Administration Commission, is part of State Shipbuilding's effort to streamline its business, Hudong Machinery said.
The transaction will not involve any cash, the company said.
Analysts said the deal is part of State Shipbuilding's pre-listing revamp to simplify the shareholding structure in various subsidiaries.
State Shipbuilding probably will not inject all its assets into the listing unit because some are very sensitive, such as the making of battleships and related equipment for the Chinese navy.