A mega-merger announced years ago between Chinese state shipbuilders, China State Shipbuilding Corp and China Shipbuilding Industry Co, is about to be implemented at the bourse level.
Share trading for both firms was suspended on the Shanghai Stock Exchange on Tuesday for up to 10 days, pending a share swap that will result in CSSC absorbing the smaller CSIC.
Under the plan, CSSC will issue “A” shares to all shareholders of CSIC. The transaction will not lead to any change of control in the combined firm.
The Chinese government approved bringing the two companies under the same roof in 2019, after years of planning.
CSSC is the world’s largest shipbuilding group with more than one-tenth of the global orderbook. The combined entity already controls more than half of China’s shipbuilding capacity and has multiple subsidiaries listed in Shanghai.
CSSC, also known as “the southern shipbuilding group”, and CSIC, “the northern shipbuilding group”, were separated in 1999.
The shipyards controlled by the merged entity include Hudong-Zhonghua Shipbuilding, Jiangnan Shipyard, Shanghai Waigaoqiao Shipbuilding, CSSC Offshore & Marine Engineering and Dalian Shipbuilding Industry Co among others.
In December, former CSIC chairman Hu Wenming was sentenced to 13 years in prison and fined CNY 5m ($700,000) for bribery and abuse of power while leading state-owned enterprises.
During his tenure as CSIC chairman from 2013 to 2015, Hu was reported to have taken bribes related to shipyard acquisitions and the reorganisation of the group’s facilities, resulting in heavy losses.
