By Lauren Dodillet
After years of rumors, a merger may be in the works for China Ocean Shipping (Group) Company (COSCO)—China’s largest shipping enterprise—and China Shipping (Group) Company. The two state-owned enterprises (SOEs) would combine over $82.9 billion in total assets, including hundreds of bulk cargo and container ships, and hundreds of thousands of container ships.
Earlier this month the Chinese government urged COSCO and China Shipping to draft an outline of the merger which would streamline the SOEs’ operations in the industry and create a final product that is more competitive internationally. The government requested the outline be presented within three months from the beginning of August, and sources close to the deal say the draft is currently being moderated by a five-member panel comprised of representatives from the two SOEs. Subsidiaries from both companies suspended trading earlier this month due to the possible merger.
The merger is expected to be difficult, according to China Shipping Chair Xu Lirong, since both companies have subsidiaries in shipping-related and non-shipping-related industries, not to mention the large size of the companies themselves.COSCO has five subsidiaries with total assets numbering over $51.6 billion. China Shipping Co has three firms sublisted, with total asserts that exceed $31.3 billion.
Despite reports, vice president of China Shipping Yu Zenggang will not confirm the merger. He has admitted the plans are in the conception phase, but denies any concrete timeline, according to Time Weekly, a Chinese news publication. The rumor mill has spun over the last decade based on frequently overlapping business interests in areas like bulk cargo, oil, and container shipping.