With China’s State Council approving China Merchants Group’s acquisition of Sinotrans & CSC Holdings yesterday, a source at a listed subsidiary of Sinotrans & CSC told Splash that the two groups have set a transition period of three years for the merger.
Within the period, the two groups will not intervene in each other’s business and they will start a full integration of businesses when the period is over.
The merger will be led by China Merchants Group’s chairman Li Jianhong, who just quit his chairman role at CIMC to focus his work at China Merchants.
Sinotrans and Changjiang Shipping Corporation (CSC) experienced an unsuccessful merger at the end of 2008 with Sinotrans & CSC Holdings suffering from losses since the merger. Its oil shipping arm Nanjing Tanker was delisted from Shanghai Stock Exchange in 2014, and its domestic dry bulk shipping subsidiary CSC Phoenix was sold to private firm Shunhang Shipping this year after three consecutive years of losses.
According to the source, logistics could be one of the main focuses of the merger between the two groups.
China Merchants and Sinotrans & CSC have already merged their tanker assets by establishing a joint venture China VLCC and the two groups don’t have significant container shipping and bulk shipping operations compared to Cosco and China Shipping.
Sinotrans is currently the largest logistics service provider in China.
China Merchants said on its website yesterday that the merger will create synergies in integrated logistics, logistics park development, energy shipping and equipment manufacturing.