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Sinotrans & CSC confirms plan for ‘strategic reorganisation’

Sinotrans & CSC confirms plan for ‘strategic reorganisation’
Sinotrans & CSC Holdings has confirmed it is going through a “strategic reorganisation” that is pending regulatory approval, further confirming the potential merger with compatriot China Merchants Group.

The listed units of Sinotrans & CSC announced to the stock exchange that it has received a written notice from its holding company that it is preparing for a strategic reorganisation.

“Particulars of such reorganisation have not as yet been determined and will require the approval of the State-owned Assets Supervision and Administrative Commission (SASAC) and relevant regulatory authorities, therefore subject to uncertainty,” said a statement from Sinotrans Shipping, a Hong Kong-listed subsidiary of the group.

“The company has also been informed by Sinotrans & CSC that the possible strategic reorganisation involves an independent third party that is controlled by SASAC,” it added.

Speculation of the tie-up between Sinotrans & CSC and China Merchants surfaced when the local media reported that Beijing has ordered the merger of the two shipping groups.

In September, the two groups, via their listed subsidiaries, issued statements saying that they have yet to receive any notices regarding the merger, stopping short of denying the potential merger.

Meanwhile, two other Chinese shipping conglomerates China Cosco Group and China Shipping Group are also in talks about a potential merger.

Ren Yuanlin, executive chairman of privately-owned Yangzijiang Shipbuilding, told Seatrade Maritime News: “The merger of Sinotrans & CSC and China Merchants Group is underway, and their deal may well be confirmed ahead of the Cosco and China Shipping merger.”

The various business units of Cosco and China Shipping mean that it would be a complex asset reorganisation for the two conglomerates. Sinotrans & CSC and China Merchants, on the other hand, already have an existing joint venture for their VLCC business established in September 2014.

Apart from the potential mergers of the two pairs of shipping groups, two of China’s state-owned shipbuilders, China Shipbuilding Industry Corporation (CSIC) and China State Shipbuilding Corporation (CSSC), are also expected to merge, in a move to streamline the country’s excessive yard facilities.