China Ocean Shipping Co (Cosco Group) and China Shipping Group have issued a statement that confirms their intention to merge and how they will get the ball rolling.
Yesterday, China’s state-owned Assets Supervision and Administration Commission of the State Council gave its in-principle approval to the merger.
The merger process will begin through Cosco’s acquisition of the China Shipping Group’s subsidiary China Shipping Ports Development (CSPD).
Cosco will purchase all the shares in CSPD from CSCL and China Shipping Hong Kong (CSHK) for RMB 7,632,455,300 ($1.18bn).
In exchange, Cosco will sell Florens Container Holdings Limited (FCHL) to China Shipping Container Lines (CSCL) for RMB7,784,483,300 ($1.21bn) and its shareholder loans for a further $285,000,000.
Cosco expects to record an unaudited gain of approximately $62.7m once the two transactions have been completed.
In addition, China Shipping Development (CSD) will acquire tanker company Dalian Ocean from Cosco, and will sell its bulker subsidary CS Bulk to Cosco. “Certain bulk shipping assets of CS Development will be injected into CS Bulk,” a filing said.
“The present stage of the reorganisation will involve mainly the container shipping, ship leasing, tanker shipping, bulk shipping, financial businesses and other sectors carried out by certain other companies within the Cosco Group. It will not involve the [Cosco Corp (Singapore)]’s business segments for the time being,” said Wu Zi Heng, vice-chairman and president of Cosco Corp (Singapore), in a note to investors today.
“[Cosco Corp (Singapore)] has also been informed that its parent company will further optimise the allocation of resources according to future development strategies and will continue to support the business development of its various listed companies,” he continued.
Trading of shares in Cosco Pacific, Cosco International Holdings and CS Development on the Hong Kong stock exchange was suspended on August 10 this year and will be resumed on Monday, December 14.
Trading of Singapore-listed Cosco Corp (Singapore) will resume on the same day, having ceased on August 11.