- After getting the approval of the State Council, the state-owned China Guodian Corporation will officially merge with another state-owned enterprise, Shenhua Group, as reported by Cnstock.
- The two firms will be merged into a new company named China Energy Investment Corporation.
Why It Matters:
- The merger will create the largest energy conglomerate in China. By the end of April, the total assets of Shenhua Group amounted to RMB 1.1 trillion while the assets of China Guodian Corporation also exceed RMB 800 billion.
- Shenhua Group is engaged in the coal business as well as port and several other business areas while China Guodian Corporation is a leading power generation company. The Chinese government plans to leverage the merger between the two companies to vertically consolidate the power industry and improve efficiency around the globe.
- The merger will also provide impetus to the stock market and the shares of GD Power Development Co. (600795.SS) and China Shenhua Energy Co. (601088.SS/1088.HK) are likely to benefit.