The administration of President Xi Jinping has just given green light for the merger of the century. Shenhua Group Corp. and China Guodian Corp will become one. Both of them hold influential positions within the national industry. Once they unite their powers, they will become the largest power company on the entire planet.
The Merger between Shenhua Group Corp. and China Guodian Corp Will Result in the Largest Power Company by Capacity in the World
On Monday, the federal Assets Supervision and Administration Commission announced that the government of President Xi Jinping allowed some major changes. The top coal miner in the country, Shenhua Group Crop has now the necessary permission to unify with China Guodian Corp which is one of the biggest Chinese generators.
The result of this merger will represent the second biggest company in the world as far as the revenue is concerned. The combined assets are worth around 1.8 trillion yuan or $271 billion. However, the merger will also give birth to the largest power company as far as the installed capacity goes.
Authorities in China have taken the mission to put an end on overcapacity within industries and to limit the number of state-owned enterprises. Through mergers of this kind, they hit both their goals. As a consequence, people might start seeing several other such tie-ups within the power industry. Monday’s announcement was just a confirmation for speculations that lasted several months.
The New Company Will Have a Capacity of 225 Gigawatts
A senior analyst at Sun Hung Kai Financial Ltd, Tian Miao, commented on this business event as the first out of numerous others to come. Through this reform regarding state-owned businesses, companies can overhaul investments and boost efficiency.
The news reached the public through a one-sentence statement. However, Shenhua’s chairman, Ling Wen, claimed that his party did not receive confirmation from law makers regarding their merger. Therefore, it is not clear yet if the deal is sealed or not.
Nonetheless, the merger is slated to become an international rival with a capacity of 225 gigawatts. These assets will surpass Enel SpA and Elecricite de France SA. The latter’s capacity recorded no more than 137.5 gigawatts last year while Italy’s Enel had a capacity of 83 gigawatts by June 30.
Image source: 1