China CNR Corp and CSR Corp, the world's two largest train makers, have formally agreed to merge into a rolling-stock behemoth. The move was finalised at the board meetings of the two companies in Beijing in the past two days. Under the merger plan, CSR would fully acquire CNR through a swap of the Hong Kong and Shanghai shares of the two companies, the state-owned companies announced on the Shanghai Stock Exchange website yesterday. The new name of the combined entity will be CRRC Corp. CNR and CSR together command more than 90 per cent of the mainland's rolling-stock market, including the country's multibillion-dollar high-speed train market. In 2012, CNR was the world's biggest train maker by revenue, followed by CSR, according to a report by SCI Verkehr, a German transport consultancy. The combined revenue of the two companies was about €21 billion (HK$198.5 billion) in 2012, more than double the revenue of the world's third-biggest train maker, Bombardier Transportation of Canada, according to the consultancy. Under the share swap, every share of CNR will be exchanged for 1.1 shares of CSR. The swap price of CSR's A shares is 5.63 yuan (HK$7) while that of its H shares is HK$7.32. The swap price of CNR's A shares is 6.19 yuan while that of its H shares is HK$8.05. "This merger will increase the scale of the combined company, raise profitability and create a global leader," the companies said in a joint announcement. Analysts say that in bidding for overseas contracts, the merger will enable the new entity to compete better with international rivals. Beijing had announced plans for US$1.2 trillion of overseas Chinese investments in the next 10 years, the companies said. "The establishment of a Silk Road Fund, the Asian Infrastructure Investment Bank and the BRICS Bank will provide financial support to the development of Chinese infrastructure throughout the world," they said. The mainland also still offered opportunities for rolling stock, given that 10,800km of intercity rail would be built from 2016 to 2020 and 36 cities received state approval to build metro railways as at May, they said. "After the merger, the new company will increase its global market share and accelerate its internationalisation," they said. "It will avoid wastage of resources, improve the efficiency of investment, create a united strategy in overseas expansion and focus on gaining a more advantageous position in the international competition." The merger will enable the two to enjoy economies of scale, upgrade technology by sharing research and development, avoid duplicate investments and improve efficiency in the use of resources. Shares in the two companies, suspended since October 27, will resume trading today.