China’s top two shipping companies COSCO and China Shipping are discussing the possibility of a merger.
They could release an outline plan within three months, a source close to the industry has revealed to IHS Maritime.
A team of five, led by Xu Lirong, chairman of China Shipping Group, is planning the merger, IHS Maritime was told by Qi Yinliang, founder and chief editor of Ship.sh.
Another two members from within China Shipping Group are likely to be selected from Xu Wenrong, chief of the discipline and inspection committee, Huang Xiaowen, vice-general manager, and Yang Jigui, deputy chief accountant.
The other two team members will be from COSCO, with likely contenders being Li Yunpeng, general manager, Sun Yueying, chief accountant, and Sun Jiakang, vice-general manager, Qi said.
One notable omission from the team could be Ma Zehua, chairman of COSCO. That, Qi speculated, may be because of his age.
China COSCO, COSCO Shipping, China Shipping Container Lines (CSCL), China Shipping Development, and China Shipping Network Technology, five listed branches of the two companies, suspended stock trading on 10 August. Their respective stock exchange fillings said, “Trading in the shares of the company will be suspended with effect from 9.00 am on 10 August 2015 pending the release of an inside information announcement relating to the plan by the controlling shareholder of the company (COSCO/China Shipping ) for a significant transaction which involves the company.”
Financial advisory services company Essences Securities has said it believes container shipping will be the core of any merger, and predicted that a first step would be the establishment of a platform bigger than COSCO and China Shipping to take charge of the integration of assets, financial issues and human resources. Later, similar business sectors of the two companies will be merged, it predicted, and finally will come the integration of the two giant listed companies.
An employee of CSCL told Ship.sh that the possible integration was good news for both companies, but he had some concerns about career development. A source from COSCO talking to IHS Maritime also expressed concerns about a merger, pointing to the merger of Sinotrans and CSC as a negative example.
The integration of state-owned enterprises under the direct control of the State-owned Assets Supervision and Administration Commission (SASAC) is quite complicated, according to Qi, and the establishment of the team leading the merger is the very first step. If everything goes well, the merger could be completed by 2017, Qi said.
This post was sourced from IHS Maritime 360: View the original article here.