China Guodian Corp and China Energy Investment Corp ("CHNENERGY") have signed a merger agreement on February 5, said CHNENERGY's listed subsidiary China Shenhua Energy in an announcement on the same day.
The merger is subject to the compliance with relevant procedural requirements and the receipt of necessary approvals, authorizations and permission from competent regulatory authorities. After the merger, CHNENERGY will continue to be the controlling shareholder of Shenhua Energy, the company said.
In the meantime, GD Power Development Co., Ltd., a Shanghai-listed arm of Guodian Corp said its actual controlling shareholder will be CHNENERGY instead of Guodian and final controlling shareholder will be SASAC (State-owned Assets Supervision and Administration Commission of the State Council).
According to the announcement China Shenhua Energy issued on November 27, CHNENERGY completed industrial and commercial registration of changes. CHNENERGY will be the parent company after the merger with Guodian by way of absorption, which has been passed by the company's board resolution on January 4.
After the merger, CHNENERGY will be the largest coal miner and power generator in the country.
On September 1, GD Power and China Shenhua Energy reinstated trading in Shanghai Stock Exchange and limited up on the same day. However, the two stocks have since then parted their ways.
With coal prices soaring in recent two years, most listed coal companies have swung to profit while power companies were seen struggling in great losses.
China Shenhua Energy exported its net profit to reach 45.2 billion yuan in 2017, a 99% increase from a year ago; while GD Power said its full-year net profit will be at 1.8-2.3 billion yuan, tumbling 49.66-60.60%.
In face of increasing contradiction between coal and thermal power industries, merger and acquisition is considered to be one of best solutions. The marriage of Shenhua Group and Guodian Group has been widely thought worth of emulation.
(Writing by Alex Guo Editing by Tammy Yang)
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