In a move that we can’t help but think looks suspiciously like war prep, two Chinese state-owned shipbuilders announced Monday plans to merge, according to a new report from Nikkei Asia.
The report says up front the merger could “help them better serve the military”. Key details, such as pricing, asset handling, employee treatment, and protections for dissenting shareholders, have yet to be revealed.
The Nikkei report says that in nearly identical filings to the Shanghai Stock Exchange on Monday night, China CSSC Holdings and China Shipbuilding Industry (CSICL) announced they had signed an agreement to merge.
On Monday, CSSC Holdings’ shares closed at 34.90 yuan, and CSICL’s at 4.98 yuan. The merger would involve CSSC Holdings absorbing CSICL through a stock swap.
Based on current prices, CSSC Holdings’ market cap is 156.08 billion yuan ($22 billion), while CSICL’s is 113.55 billion yuan. The companies aim to “further focus on major state strategy.”
“Promoting equipment for a strong military” was also mentioned as a priority in the filings, according to the report.
The report says that the two companies are part of China State Shipbuilding Corp. (CSSC), a central state-owned conglomerate overseen by the State-owned Assets Supervision and Administration Commission (SASAC).
SASAC has recently increased pressure on listed arms of central companies to enhance market value by improving governance, raising disclosure standards, conducting share buybacks, and increasing dividends. If the merger boosts efficiency and profitability, it aligns with government policy goals.
CSSC has a complex history, dating back to a 1950 government organization for shipbuilding, which was reorganized in the 1970s and later split into “North Ship” and “South Ship” entities in 1999.
These merged in 2019 to form the current CSSC, but CSSC Holdings and CSICL, from the original north and south entities, remained separate listed companies with overlapping businesses….until now.
Tyler Durden
Wed, 09/04/2024 – 20:40
