(Yicai Global) Oct. 17 -- Affiliates of petrochemicals giant Sinochem Group and chemicals giant China National Chemical Corp. have both denied knowledge of an impending merger following a Bloomberg News report claiming that China is planning to merge the two companies to create an oil-to-chemicals giant.
The article, entitled 'China Planning Merger of SinoChem, ChemChina,' was published by Bloomberg News on Oct. 14 citing a person familiar with the matter. The news sent the shares of several companies affiliated with the state-owned heavyweights soaring. Sinochem International Corp. [SHE:600500] reached the upper limit, while Jiangsu Yangnong Chemical Group Co. [SHE:600486] and Aeolus Tyre Co. [SHE: 600468] saw their stocks raised by about 5 percent.
Both Sinochem International Corp. and Aeolus Tyre Co., subsidiaries of Sinochem and ChemChina, have released announcements stating that neither the parent company nor its affiliates have received any written or oral notification from the government about such a merger.
Beijing has been promoting the integration of large state-owned enterprises with similar businesses. Two of the largest railway equipment manufacturers, China CSR Corp. and China CNR Corp., merged into CRRC Corp. in June last year. Two iron and steel heavyweights, Shanghai Baosteel Group Corp. and Wuhan Iron and Steel (Group) Corp., have also announced plans to merge.
This type of asset restructuring is very complex and needs confirmation from the State Council, China's cabinet.