(Yicai Global) April 25 -- State-owned steel giants are merging in China as the world’s biggest steelmaker China Baowu Steel Group is gifted about CNY4.3 billion (USD655 million) by including Xinyu Iron and Steel Group, the largest steel and iron producer in eastern China's Jiangxi province, to its family.

Baowu intends to take control of a 51 percent stake in Xinyu from Jiangxi State-Owned Capital Operation Holding Group for free, the target company's listed unit said in a statement yesterday. The assets are valued at about CNY4.3 billion.

The buyer has been expanding its capacity through mergers and acquisitions, as well as restructuring, in recent years. Since 2019, Baowu has added the biggest local steelmakers in Anhui, Shanxi, and Yunnan provinces, as well as Chongqing, to its network.

The seller of the 51 percent stake will retain the remaining shares in Xinyu. After the transaction, Baowu will indirectly hold a 44.8 percent stake in the target firm's listed unit, Xinyu Iron and Steel.

Baowu’s crude steel output tallied 115 million tons in 2020, ranking No. 1 worldwide, according to statistics from the World Steel Association. Meanwhile, Xinyu's position was No. 46.

Baowu's aim is to increase collaboration and restructuring to achieve a crude steel output of 200 million tons by 2025 and gain a global market share of 15 percent by 2035, the firm said in a statement on its WeChat account this month.

Xinyu Iron and Steel [SHA: 600782] closed 7.5 percent down at CNY5.42 (US 80 cents) today.

Editor: Emmi Laine, Xiao Yi