[BEIJING] Two of China's biggest shipping firms could release statements within days about a possible merger, a senior government official said on Friday after media reported cabinet had approved the tie-up.
The combination of China Ocean Shipping (Group) Company (COSCO) and China Shipping Group would create the world's fourth-largest container shipping company with a roughly 8.1 per cent share, a major step in Beijing's plan to develop a globally competitive maritime industry.
"About the merger plan of China Shipping and COSCO, I would suggest you monitor statements from the two firms in the coming days," Zhang Xiwu, vice chairman of the Assets Supervision and Administration Commission (SASAC), the agency that spearheads state-sector mergers, told reporters.
A merger of the two firms would represent a massive reshuffling of government-controlled assets as consolidation of China's state-owned industries gathers momentum.
Collectively, COSCO and China Shipping control 488 billion yuan (S$106.4 billion) in assets, according to Barclays analysts.
Even so, as a merged entity they would still lag far behind the top three industry players - APM Maersk, Mediterranean Shipping Company and CMA CGM, which oversee almost 40 per cent of the market, analysts said.
Share trading in the listed units of the two conglomerates, including COSCO's flagship China COSCO and China Shipping's China Shipping Development, have been halted since Aug 10.
Chronic over-capacity and slow economic growth have pushed global freight rates to record lows, leading firms to enter vessel-sharing alliances and look for acquisitions.