COSCO, China Shipping share trade halted amid merger talk

BEIJING - Rumours of a possible merger between China’s two largest shipping lines – China Ocean Shipping Co. (COSCO Group) and China Shipping Co., both State-owned – has led to the suspending of the companies’ listed subsidiaries as of August 10. A COSCO executive said the central Government had urged the two companies to draft a preliminary merger plan within three months starting from August, while a five-member working group will be set up to review the merger plan.

In correspondence with Caixin media, the executive said that because the two companies have businesses in many sectors, such as shipping, logistics and trading, their merger is “expected to be more difficult” than that of the recent CNR Corp. Ltd. and CSR Corp. Ltd.., which merged to become China Railway Rolling Stock Corp. Ltd. in June.

China Daily pointed that a merger between COSCO and China Shipping could “point the way” towards possible streamlining of other State-owned enterprises (SOEs), and help raise stock market sentiment.

Industry academics are drawing comparisons between this and last year’s merger between Denmark’s Maersk Line and Switzerland’s Mediterranean Shipping Co SA, which it was said would help offset lower volume growth and overcapacity in the industry.

Prof. Dong Liwan said a merger of COSCO and China Shipping “would be equally practical in helping them compete against some well-established rivals on many overseas shipping routes”. www.webershandwick.cn (ATI).