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Beijing set to approve Cosco-China Shipping merger this year

BEIJING is expected to give the go-ahead at the end of the year for the merger draft plan of COSCO Group and China Shipping Group, according to a source familiar with the matter, the Lloyd's Loading List reported.

After approval is given, the two giants and their subsidiaries will begin to restructure their debts, and a formal announcement about the consolidation can be expected early next year, the source said.

It's believed that both companies will merge their container shipping businesses first, due to the economies of scale which can be created in the sector. However, the source said the two state-owned conglomerates might start merging their different segments, including bulker, tanker, boxship and ports all at the same time, though Beijing will still have the final say.

"There are many difficulties to be resolved," the source added.

The listed units of Cosco and CSG, including China Cosco Holdings and China Shipping Development, collectively suspended the trading of their shares in August shortly after ship.sh, a Shanghai-based shipping website, disclosed that the two conglomerates had jointly set up a working group to iron out a draft merger plan.

On September 16, the listed subsidiaries extended their stock trading suspensions and noted that their parent groups were planning significant events that involved asset reorganisation. Later that same day, a person close to the state-owned Assets Supervision and Administration Commission of the State Council told local media that the draft plan had been completed and was under review by Beijing.

Shanghai-and Hong Kong-listed China Cosco and other listed units are now expected to lift trading halts on their shares before November 16, according to earlier exchange filings. But the source said there would likely be more extensions.

These units held shareholder meetings early this week to discuss "issues related to the trading halts on their stocks", but did not disclose when their shares will begin trading again.

Board secretary of China Cosco Guo Huawei told shareholders during the meeting that "the reorganisation plan is still under study."

The Shanghai Stock Exchange last Friday released an exposure draft set to better regulate information disclosure of listed companies involved in asset organisations. In it, the bourse proposed that the trading halt on a company's stocks for such purposes shall not exceed five months under normal circumstances.