The State-owned Assets Supervision and Administration Commission of the State Council (SASAC), China’s top state-owned assets watchdog, announced on its official website Wednesday that a merger deal has been reached between the country’s two nuclear giants.
The merger deal was reached between the China National Nuclear Corporation (CNNC) and the China Nuclear Engineering& Construction Corporation (CNEC), the Shanghai Securities News reported on Thursday.
Under the deal, the CNEC as a whole will be consolidated into the CNNC without compensation and become a subsidiary of the CNNC. After the merger, the CNNC will no longer be supervised by the SASAC, meaning that the SASAC has further reduced the number of enterprises directly under its supervisions, also known as centrally-administered state-owned enterprises, to 97.
In fact, the merger between the two companies had already been put on the agenda almost a year ago. Back in March 2017, listed subsidiaries of the two companies all announced that the strategic recombination between the two was underway.
According to the CNNC’s financial report, the company’s assets had reached over RMB 474 billion by the end of 2016 with a debt ratio of 70 percent, while the total assets of the CNEC were RMB 123.8 billion by the end of the first quarter of 2017 with a debt ratio of 83 percent. Hence, after the merger, the total asset of the CNNC is expected to reach roughly RMB 600 billion.
In addition, by acquiring the CNEC’s expertise on nuclear plant construction, the CNNC will greatly strengthen its competitiveness by becoming capable of designing, building and operating nuclear plants, which is rarely seen in the world at present.
In fact, the SASAC has been stepping up its effort to cut the number of centrally-administered state-owned enterprises since 2012, and prior to the merger between CNNC and CNEC, there had been two merger deals struck in the country’s energy industry.
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