It has been less than a month since the suspension of trading on June 5, and the expectation of a merger between Shenhua and Guodian is growing stronger. Several speculations about the merger method have gradually emerged in the industry.
According to Bloomberg, China Shenhua is considering acquiring Guodian Power as early as next month, as part of the merger of their parent companies, which would create a combined entity with total assets close to $267 billion.
According to sources familiar with the matter, an all-stock acquisition of Guodian Power by China Shenhua is the preferred method, and Guodian Power would be delisted.
However, the plan is still under discussion and may change; alternative plans for the parent company merger include swapping power and coal assets between subsidiaries, with both listed entities retained.
Since the departure of Shenhua's former chairman Zhang Yuzhuo on March 27, the chairman position has been vacant for three months. Recently, there are reports that the preparatory group for the Shenhua-GuoDian restructuring has been established, with Qiao Baoping, chairman of Guodian Group, as the group leader, and it is highly likely that a National Energy Investment Group will be established.
The restructured National Energy Investment Group would have assets of 1.8 trillion yuan, placing it in the first tier of central enterprises; coal-fired power installed capacity of 1.8 trillion kilowatts, ranking first domestically; coal production of 460 million tons, ranking first domestically; and wind power installed capacity of 32.83 million kilowatts, ranking first domestically.
In this regard, Wang Xiuqiang said that regardless of the restructuring plan chosen, the merger of the two energy central enterprises will create an energy giant integrating coal, power, ports and railways, and coal chemicals, which will significantly change the domestic energy supply landscape.
The industry also believes that an energy company of this scale will be highly competitive not only domestically but also internationally. The latest announcements from Shenhua and Guodian both state that, according to the notice from the controlling shareholder, after demonstration and consultation with relevant parties, the major event being planned may constitute a major asset transaction involving the company, which requires opinions from relevant ministries and commissions and is a major unprecedented matter. Currently, the matter is still in the planning process and there is uncertainty, so the suspension will continue until July 4.
