China Guodian Corporation, Shenhua Group Submit Proposal for USD267 Billion Merger
Jin Yuanjia
/SOURCE : Yicai
China Guodian Corporation, Shenhua Group Submit Proposal for USD267 Billion Merger

(Yicai Global) Aug. 3 -- China Guodian Corporation and Shenhua Group have submitted a merger proposal to the State Council for a potential deal which would create the country's largest power generation group, said Guan Weizhu, section head at China Guodian's safety production department while speaking at the 11th China New Energy International Forum held in Beijing yesterday.

The new group would temporarily be named National Energy Investment Group.

Total assets of the combined group will exceed CNY1.8 trillion (USD267 billion), the debt ratio will be over 60 percent, and total installed capacity will reach around 226 million kilowatts.

China Shenhua Energy Co. [SHA:601088], a listed company under Shenhua Group, and GD Power Development Co. [SHA:600795], a subsidiary of China Guodian, confirmed in June plans for what it called an important development. Trading of stocks in both firms was suspended subsequently and now the restructuring has officially begun.

Shenhua Group is the largest state-owned coal enterprise in China and engages in electric power, railway, port, shipping, coal-to-liquids and coal chemical engineering. As of the end of last year, Shenhua Group owned 22 wholly-owned and holding subsidiaries, 49 in-service coal mines, held CNY979.3 billion in total assets and employed around 202,300 workers.

China Guodian Corporation is one of the 'Big Five' power producers in China, focusing on power generation and engaging in power source development, investment, construction, operation and management.

By the end of 2016, China Guodian's total installed capacity was 143 million kilowatts, and total assets reached CNY803.1 billion. The company has also installed nearly 25.83 million kilowatts in wind power capacity, making it a leading company in the field.

China Guodian and Shenhua Group have already set up a preparation group for the merger, insiders said. Qiao Baoping, China Guodian chair and Ling Wen, Shenhua Group general manager lead the group and may serve as top executives in the new company.

USD1 = CNY6.8

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Keywords: MSCI , Shenhua Group , M&A , Power Generation Groups