Marking Chinese Valentine’s Day yesterday, two major state-run power groups China Shenhua Group and China Guodian Corporation have announced that they have officially started a merger process.
The two groups suspended stock trading in June for the planning of the merger, which will see Shenhua Group change its name to China Energy Investment Corporation and absorb Guodian Group. The merger is expected to create the largest power company in the world.
According to Shenhua Group, the merger is a response to the central government’s efforts to push forward structural reforms on the supply side, intensify reforms of state-owned enterprises and optimise the state-owned economy in China.
Following the merger, the number of state-owned companies supervised by the State-Owned Assets Supervision and Administration (SASAC) will be reduced to 98 from 196 in 2003.
The two groups believe the deal will reinforce business cooperation, expand market share and establish long-term coal supply relationships.
Both the Shenhua Group and Guodian Corporation operate sizable shipping and port assets. Shenhua Group owns a fleet of over 40 bulkers and three port terminal companies in Huanghua Port, Tianjin Port and Zhuhai Port, while Guodian operates a fleet of 15 bulkers through its subsidiary Tianjin Guodian Shipping.