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China rolls ahead with merger of train makers: report
[SHANGHAI] China is moving forward with the merger of its two top train makers, a state-backed newspaper said Wednesday, with a plan to create a massive group to export high-speed railway technology.
State media have previously said the merger of state-owned China CNR Corp. and CSR Corp. will help prevent "cut-throat" competition between the two.
The merger could also put the combined entity in a stronger position to take on the likes of Germany's Siemens and Bombardier of Canada in seeking business overseas.
A draft plan for the merger has been submitted to policymakers, the 21st Century Business Herald reported, citing an unnamed source, but did not say who had drawn it up or what government approvals were needed.
The new entity's Chinese name will be "China Railway Rolling Stock Group", the newspaper said.
CSR will take the lead, taking over CNR in an all-share deal and absorbing its business and employees as well as assets and debts, the report said.
Neither company has commented on the proposed merger, which came to light in October through media reports.
The two companies, both dual-listed on the Shanghai and Hong Kong stock exchanges, have suspended their shares from trading pending "important" announcements, exchange filings show.
CSR was embroiled in a 2011 scandal after a high-speed train crash near Wenzhou city killed at least 40 people and sparked an investigation that found evidence of bribery in railway construction.
It was also part of a consortium that won a US$3.75 billion (S$4.9 billion) high-speed railway contract from Mexico in early November, but the contract was cancelled shortly afterwards amid questions over the legality of the bidding process.
CSR's net profit rose 58.29 per cent year-on-year to 3.97 billion yuan in the January-September period, according to the company.
CNR secured a deal in October to supply metro trains to the US city of Boston. Its net profit jumped 65.1 per cent year-on-year to 3.96 billion yuan in the first three quarters of this year, the company said.
The firms share the same origin, a rail vehicle manufacturer spun off from the former railway ministry in 2000 and split into two.
The railway ministry itself was merged into another state agency in March last year, and its commercial functions turned over to a new company, China Railway Corp.