Will COSCO-CSCL Marriage Happen Soon?

 

The beleaguered state behemoths struggling in a protracted industry slump  - China Ocean Shipping Group  (Cosco) and China Shipping Group -  were ordered to come up with a merger plan late Thursday, sources told the South China Morning Post.

 

The mainland’s two largest shipping and logistics conglomerates together control 11 listed entities in Shanghai, Shenzhen, Hong Kong and Singapore.

 

The companies’ five subsidiaries listed in Shanghai, Shenzhen and Hong Kong all applied for a trading halt after market close on Friday, which they said was to plan “material matters”. 

 

Both carriers have avoided the embarrassment of a stock market delisting only by selling their “family silver” – assets to prop up their balance sheets – and have been assisted by what Alphaliner describes as “an effective bailout” of significant ship scrapping state subsidies.

 

Chinese media reported on April 16 that Beijing was planning to consolidate several of its state-owned giants, which would include the mergers of Cosco, China Shipping Container Lines (CSCL), China Merchants Group and Sinotrans. The merger of Cosco and CSCL has been mooted for at least the past three years.

 

The two companies already cooperate closely, having signed a ‘Strategic Cooperation Framework Agreement’ in February last year. The framework allows Cosco and CSCL to share resources and facilities in shipping, terminal operation, logistics, shipbuilding and ship repair.