China Combines Two State-Owned Nuclear Firms Into Powerhouse
China has given the green light for two of its largest nuclear-power firms to merge as it continues to consolidate state-owned enterprises to reduce overcapacity and improve operating efficiency.
China’s state-asset regulator on Wednesday approved the proposed merger of China National Nuclear Corp. (CNNC), the country’s largest nuclear power plant developer and operator, and China Nuclear Engineering & Construction Corp. (CNECC), which builds nuclear-power plants.
The two companies have been under direct supervision by the China State-Owned Assets Supervision and Administration Commission (SASAC). CNECC will become a subsidiary company of CNNC, according to the announcement by the regulator. The merger will reduce the number of enterprises run by the central government to 97, compared with 117 in 2012.
The merger will create a new nuclear powerhouse with assets worth more than 600 billion yuan ($95.4 billion), according to estimates based on the two companies’ financial statements.
The consolidation will not affect the assets and trading of the three listed companies owned by CNNC and CNECC — Shenzhen-listed SUFA Technology Industry Co., Shanghai-listed China National Nuclear Power Co. and Shanghai-listed China Nuclear Engineering & Construction Corp.
The nuclear merger is among a handful consolidation deals in China’s energy industry.
Last year, the SASAC approved the merger of electricity producer China Guodian and Shenhua Group, the country’s top coal miner, to create the world’s largest power company by capacity, with combined assets of 1.8 trillion yuan.
In 2015, State Power Investment Corp. was established through the merger of the State Nuclear Power Technology Corp. and China Power Investment Corp., becoming one of three nuclear power plant developers and operators in China.
Mergers have also taken place in other sectors, including tourism and construction materials.
On Tuesday, the Beijing State-Owned Assets Supervision and Administration Commission approved the proposed merger between state-owned hotel chain operator Beijing Tourism Group and Wangfujing Dongan Group Co., a Shanghai-listed retailer. After the merger, Beijing Tourism Group will have total assets of more than 100 billion yuan.
Last year, the China National Travel Service (HK) Group merged with China International Travel Services Group in a multibillion yuan deal that created the country’s largest tourism conglomerate.
In the steel industry, which has long ben plagued by overcapacity, Baowu Steel Group was formed late last year in a merger between Baoshan Iron and Steel Group and Wuhan Iron and Steel, making it the largest steel producer in China, and the second largest in the world.
A merger between China State Shipbuilding Corp. and China Shipbuilding Industry Corp. is expected to be next, analysts said.
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