China Shenhua Energy Co., Ltd. and GD Power Development Co., Ltd. didn't resume stock trading as expected since two months ago amid merger matters of their parent companies ‒ Shenhua Group and China Guodian, said the companies on August 4.
Their stocks trades would have been resumed on August 4 according to a notice released on July 3.
Their stocks are expected to suspend till September 4 from August 7 as it will probably not be able to obtain the approval from the administrative department of state-owned assets and disclose the proposal of transactions(s) within two months from the first day of suspension (i.e. 5 June 2017).
Shenhua Group and China Guodian applied to China's State Council for merger approval last week. If approved, the resulting entity would be the world's largest power provider.
It would command combined assets of $236 billion, and enjoy unparalleled negotiating powers with state coal and power firms.
Shenhua currently derives about 90% of its power capacity from coal; while Guodian has invested heavily into hydropower, wind power and solar.
Meanwhile, Guodian can benefit from a powerful coal ally such as Shenhua to manage supply and price risks.
Rumors that the two energy giants were in merger talks have been swirling since early June, causing stocks in both companies to jump in value.
The proposed merger is part of a sweeping set of proposed consolidations in China's energy sector. China's state firms have been burdened by mounting overcapacity, which state planners have attempted to remedy in part by merging strong companies with under-performing ones.
(Writing by Alex Guo Editing by Harry Huo)
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