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SASAC approves BaoSteel and WISCO merger-The 18th China(Guangzhou)Int’l Metal &Metallurgy Exhibition
9/20/2016 金属展-冶金展-钢铁展-steel expo-metal &metallurgy expo |
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Caixin reported that two of China''s largest steel makers have received regulatory approval to merge by the end of this month. The planned merger of China''s second-largest steel maker, Shanghai-based Baosteel Group Corp and smaller rival Wuhan Iron and Steel (Group) Corp, won approval for the deal in late August from the State owned Assets Supervision and Administration Commission, which overseas state owned companies. The plan has been submitted to the State Council, China''s cabinet, for final review and approval, which is expected later this month
According to the merger plan, WISCO, which has been losing a lot of money in recent years, will be merged into Baosteel and become a subsidiary of the new company. Baosteel will issue shares to WISCO''s shareholders for a swap and WISCO will delist after the merger.
The merger will create an industry behemoth with annual capacity exceeding 60 million tonnes and over CNY 700 billion (USD 105 billion) in total assets. The new company will replace Hebei Iron and Steel Group as China''s largest steel maker and make Baosteel/Wuhan Iron the world''s second-largest, ranking only behind ArcelorMittal.
Shanghai-listed Baosteel and WISCO have suspended trading in their respective shares since June 26, citing strategic restructuring in separate filings to the Shanghai Stock Exchange. The concurrent release hinted at the long-speculated merger of the pair.
Mr Xu Shaoshi, head of the National Development and Reform Commission, told the media on June 26 that the merger was meant to cut overcapacity.
Under the government pressure, Baosteel and WISCO have announced their targets. Baosteel will cut 9.2 million tons of production capacity in three years. WISCO will shrink 4.42 million tons of steel production and 3.19 million tons of iron production this year, laying off or resettling about 10,000 workers.
-The
18th China(Guangzhou)Int’l Metal &Metallurgy Exhibition
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