China’s Two Biggest Trainmakers Soar After Agreeing to Merge (1)
2014-12-31 02:32:37.607 GMT
(Updates with Shanghai share movement in fourth
paragraph.)
By Jonathan Browning and Clement Tan
(Bloomberg) -- China’s two biggest trainmakers surged after
saying they plan to combine in a $12.3 billion share swap, a
move intended to boost exports of the country’s high-speed rail
technology.
CSR Corp. will acquire smaller competitor China CNR Corp.
by issuing 1.1 new shares to CNR investors for each share they
own, the two companies said in a joint statement today. CNR
climbed 43 percent in Hong Kong trading, the biggest jump on
record, while CSR soared 31 percent at 10:18 a.m. Both companies
are state-owned.
The companies, which had $37 billion of combined sales in
the 12 months through September, are merging as competitors such
as Germany’s Siemens AG and France’s Alstom SA face constrained
public spending in developed markets. China is competing
aggressively for overseas projects, with Premier Li Keqiang
touting the nation’s rail technology on his foreign trips.
Shares of CNR and CSR, which have been halted from trading
since Oct. 27, climbed by the limit in Shanghai today.
Infrastructure builder China Railway Group Ltd. jumped 47
percent in Hong Kong during their suspension, while China
Railway Construction Corp. advanced 33 percent.
The offer values CNR at 6.19 yuan per Shanghai-traded
share, or HK$8.05 for its Hong Kong-listed stock, according to
today’s filing. The two companies earned a combined $1.84
billion in net income in the latest 12-month period, according
to data compiled by Bloomberg.
Global Competitor
The Chinese companies aren’t the only ones in the industry
seeking economies of scale: Earlier this year Siemens, Europe’s
largest engineering company, unsuccessfully tried to combine its
train operations with Alstom’s transport business as part of an
asset swap to buy the French company’s energy assets. Alstom
instead sold energy assets to General Electric Co., and will
receive the U.S. company’s rail-signaling unit in exchange.
The two Chinese companies recently embarked on a drive for
high-profile overseas projects. CSR won a 1.7 billion yuan ($274
million) contract to provide locomotives and cars for a railway
renovation project in Argentina, according to a Dec. 16
statement on the website of China’s State-owned Assets
Supervision and Administration Commission.
In October, CNR won a $567 million contract to supply
trains for Boston’s subway system, the first rail-related deal
for a Chinese company in the U.S.
CNR investors who object to the deal have the option of
receiving HK$7.21 in cash for each Hong Kong-traded share they
hold.
For Related News and Information:
China Merging Trainmakers Adds Pressure on Siemans, Alstom
China’s Two Biggest Trainmakers Seek Approval of Plan to Combine
China Said to Plan Merger of Biggest Trainmakers CNR, CSR
Top Stories: TOP <GO>
To contact the reporters on this story:
Jonathan Browning in Hong Kong at +852-2977-4706 or
jbrowning9@bloomberg.net;
Clement Tan in Hong Kong at +852-2977-2031 or
ctan297@bloomberg.net
To contact the editors responsible for this story:
Philip Lagerkranser at +852-2977-6626 or
lagerkranser@bloomberg.net
Ben Scent
2014-12-31 02:32:37.607 GMT
(Updates with Shanghai share movement in fourth
paragraph.)
By Jonathan Browning and Clement Tan
(Bloomberg) -- China’s two biggest trainmakers surged after
saying they plan to combine in a $12.3 billion share swap, a
move intended to boost exports of the country’s high-speed rail
technology.
CSR Corp. will acquire smaller competitor China CNR Corp.
by issuing 1.1 new shares to CNR investors for each share they
own, the two companies said in a joint statement today. CNR
climbed 43 percent in Hong Kong trading, the biggest jump on
record, while CSR soared 31 percent at 10:18 a.m. Both companies
are state-owned.
The companies, which had $37 billion of combined sales in
the 12 months through September, are merging as competitors such
as Germany’s Siemens AG and France’s Alstom SA face constrained
public spending in developed markets. China is competing
aggressively for overseas projects, with Premier Li Keqiang
touting the nation’s rail technology on his foreign trips.
Shares of CNR and CSR, which have been halted from trading
since Oct. 27, climbed by the limit in Shanghai today.
Infrastructure builder China Railway Group Ltd. jumped 47
percent in Hong Kong during their suspension, while China
Railway Construction Corp. advanced 33 percent.
The offer values CNR at 6.19 yuan per Shanghai-traded
share, or HK$8.05 for its Hong Kong-listed stock, according to
today’s filing. The two companies earned a combined $1.84
billion in net income in the latest 12-month period, according
to data compiled by Bloomberg.
Global Competitor
The Chinese companies aren’t the only ones in the industry
seeking economies of scale: Earlier this year Siemens, Europe’s
largest engineering company, unsuccessfully tried to combine its
train operations with Alstom’s transport business as part of an
asset swap to buy the French company’s energy assets. Alstom
instead sold energy assets to General Electric Co., and will
receive the U.S. company’s rail-signaling unit in exchange.
The two Chinese companies recently embarked on a drive for
high-profile overseas projects. CSR won a 1.7 billion yuan ($274
million) contract to provide locomotives and cars for a railway
renovation project in Argentina, according to a Dec. 16
statement on the website of China’s State-owned Assets
Supervision and Administration Commission.
In October, CNR won a $567 million contract to supply
trains for Boston’s subway system, the first rail-related deal
for a Chinese company in the U.S.
CNR investors who object to the deal have the option of
receiving HK$7.21 in cash for each Hong Kong-traded share they
hold.
For Related News and Information:
China Merging Trainmakers Adds Pressure on Siemans, Alstom
China’s Two Biggest Trainmakers Seek Approval of Plan to Combine
China Said to Plan Merger of Biggest Trainmakers CNR, CSR
Top Stories: TOP <GO>
To contact the reporters on this story:
Jonathan Browning in Hong Kong at +852-2977-4706 or
jbrowning9@bloomberg.net;
Clement Tan in Hong Kong at +852-2977-2031 or
ctan297@bloomberg.net
To contact the editors responsible for this story:
Philip Lagerkranser at +852-2977-6626 or
lagerkranser@bloomberg.net
Ben Scent