Two State-Owned Coal Giants Confirm Merger Talks
What’s new: Yankuang Group Co. Ltd. and Shandong Energy Group Co. Ltd., two state-owned coal giants in China’s energy hub of Shandong province, are in merger talks, according to a notice filed by Yankuang’s listed arm to the Shanghai Stock Exchange on Monday.
Although the talks are still officially ongoing, the Shandong government said that Li Xiyong, the chairman of Yankuang Group, had been named chairman of the merged company on the same day that talks were announced. The two companies are both controlled by the Shandong branch of the State-owned Assets Supervision and Administration Commission.
What’s the background: Yankuang Group and Shandong Energy specialize in coal production and sales, with assets valued at 327 billion yuan ($46.7 billion) and 310.9 billion yuan as of last year, respectively. The tie-up will make the new conglomerate the country’s second-largest coal group by value, following China Energy Investment Corp. Ltd.
Yankuang Group earned a total of 8.9 billion yuan last year, while Shandong Energy raked in 7.9 billion yuan.
The merger will also take its approved coal production capacity to a combined level of 374 million tons a year. The actual combined output of the two coal companies was 291 million tons last year.
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