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China to merge two top state-owned train makers: Xinhua
[SHANGHAI] China will soon merge its two biggest train makers to create a multi-billion-dollar firm as it seeks export markets for its high-speed railway technologies, the official Xinhua news agency reported, citing sources in the firms.
The two state-owned companies, China CNR Corp and CSR Corp, are likely to release "important news" this weekend, the sources told Xinhua late Tuesday following market speculation of a merger.
CNR and CSR both supply trains for China's high-speed rail network, the world's largest, and the deal will help prevent "cut-throat" internal competition, state media said.
Each is valued at around US$13 billion, with CSR having a slightly higher market capitalisation.
The two firms' shares have been suspended on the Hong Kong and Shanghai exchanges, where both are dual-listed, since Monday pending "important" announcements, according to exchange filings.
The companies share the same origin, a rail vehicle manufacturer spun off from the railway ministry in 2000 and split into two.
After multiple scandals the railway ministry itself was merged into another state agency in March last year, and its commercial functions turned into a new company, the China Railway Corporation.
CNR, which secured a deal last week to supply trains for the commuter system of Boston in the United States, said Tuesday its net profit for the first three quarters jumped 65.1 per cent year-on-year to 3.96 billion yuan (US$650 million).
The company supplied 57.3 per cent of locomotives that China Railway Corporation bought in 2013, according to its website.
CSR was embroiled in a 2011 high-speed train crash that killed at least 40 people and sparked an investigation that found evidence of bribery.
It has yet to announce earnings for the first nine months this year.
China has the world's largest high-speed rail network, but the sector has been rocked by scandals and corruption allegations.