China North Railway (CNR) and China South Railway (CSR) merge to form a new company called CRRC Corp. Shanghai Stock Exchange approve and accepts the application of Merger of both the giants, delist from the Shanghai Stock Exchange, terminates trading on individual shares.
Shanghai: A new conglomerate formed by the merger of China’s top two high-speed rail makers, China North Railway (CNR) and China South Railway (CSR), debuted strongly on the Chinese stock market on Monday.
The post-merger company, named CRRC, rose by the daily limit of 10% at the start of trading and remained at that level until the end of Monday’s trading session, priced at 32.4 yuan (US$5.29) per share.
Since the announcement of the merger of CNR and CSR on Oct. 30, 2014, shares in the two companies surged more than fivefold before their trading suspension on May 7.
According to the merger plan, the incorporated company will emphasize overseas industrial distribution and management in order to achieve global prominence.
Reuters reported on April 29 that the top two train makers have been in discussions with Bombardier about possibly buying a controlling stake in the Canadian company’s railway unit.
The discussions could not move forward until CSR and CNR completed the merger, Reuters said.
There were rumors last month that China was considering massive mergers and acquisitions of its biggest state-owned enterprises to prevent cutthroat in-fighting and build industrial giants able to face global competitors. A total of 112 centrally-administered SOEs were said to likely be cut by more than half to 40.
The State-owned Assets Supervision and Administration Commission (SASAC) later said reports about such massive M&As were “unverified.”
However, the market believes a wave of SOE mergers is on the horizon. On June 1, the SASAC announced that the State Council, China’s Cabinet, had approved the merger of China Power Investment and State Nuclear Power Technology.