China’s State Council has OK-ed the merger of China Ocean Shipping Co (Cosco Group) and China Shipping Group, the country’s two biggest shipping conglomerates, reports say.
A merger of the two groups has long been rumoured, but the two are expected to confirm the synergy publically on December 11, China’s Caixin news agency reports.
The new entity will be known as China Cosco Shipping Group and will become the world’s fourth-largest container operator by capacity. Its headquarters will be in Shanghai, sources told the agency.
China Shipping chairman Xu Lirong will reportedly lead a five-member working group, which has been set up to implement the merger plan.
The two firms were initially given three months to finalise the merger plans, after trading of the companies’ shares was suspended in August. But an executive told press that “several complications” had delayed the plans.
“The company is still working on the potential restructuring plan, however, the deal is very complex and there are still a lot of uncertainties in the deal,” Han Guomin, vice-president of Cosco Shipping, said during a briefing in November.
Chinese press reports suggest that China Shipping Group will be transformed into a financing company and its shipping assets will be transferred to Cosco in the merger.
The State Council has reportedly assessed several draft plans, which include a proposal to set up a parent investment management company that would oversee new subsidiaries specialising in domestic cargo handling and container shipping businesses in Asia.