[SINGAPORE] China is planning to merge Sinochem Group and China National Chemical Corp in what would be a combination of two companies with more than US$100 billion in assets as the government continues its overhaul of state-owned enterprises, according to a person familiar with the matter.
Details of the deal, including timing, weren't immediately clear and the plan is still subject to change, the person said, asking not to be identified because the transaction hasn't been publicly announced. It was also not clear how the the plan would affect China National Chemical, also known as ChemChina, and its proposed acquisition of Syngenta AG for a record US$43 billion.
Listed units of the two closely held groups rose. For example, Sinochem International Corp jumped as much as 10 per cent and ChemChina's Aeolus Tyre Co climbed as much as 4.3 per cent in Shanghai trading.
Should the merger be completed, it would add to the wave of consolidations the government has pushed under President Xi Jinping. More than US$1 trillion of asset combinations have emerged since late 2014 amid the nation's biggest shake-up of state enterprises since the 1990s.
Calls to Sinochem's general office, which handles media affairs, weren't answered and an e-mail inquiry to its news department wasn't immediately answered. A representative at ChemChina said the company has no relevant information to release.
The State-owned Assets Supervision and Administration Commission, the government body in charge of state-owned assets, didn't respond to a request for comment.
ChemChina is China's largest chemical firm with 140,000 employees, according to its website. The company posted a net loss of 828.3 million yuan (S$170.4 million) in 2015, while its total assets were worth 372.5 billion yuan.
The state-owned firm, which has businesses in agrochemicals, rubber tires and chemical equipment, has been in a buying spree in recent years. It started its first overseas acquisition a decade ago when it bought France's Adisseo Group. After that, it did a series of overseas acquisitions including Elkem in Norway, Pirelli in Italy and KraussMaffei in Germany.