On September 18, China CSSC Holdings Limited (CSSC) and China Shipbuilding Industry Company limited (CSIC) both announced that they are planning a major asset reorganization. CSSC will merge with CSIC through the issuance of A-shares to all shareholders of CSIC in exchange for shares. Upon completion of the merger, CSIC will terminate its listing and deregister its legal personality, and CSSC will become the surviving company.
The stocks of both parties have been suspended since the market opened on September 3, and the trading of CSSC and CSIC stocks resumed on September 19 upon application.
The announcement disclosed that the transaction amount of the assets to be purchased by CSSC in the share swap and merger by absorption is the transaction amount of the share swap and merger by absorption of CSIC, which is RMB115.150 billion (approximately US$16.26 billion) according to the “Transaction Amount = CSIC Share Exchange Price x CSIC Total Share Capital”.
Before the transaction, the total share capital of CSSC was 4,472 million shares and the total share capital of CSIC was 22,802 million shares. Without taking into account the possible subsequent ex-rights and ex-dividend effects of both parties to the merger, based on the share exchange ratio of 1:0.1335, the total number of shares to be issued by CSSC for the share swap and absorption merger will be 3,044 million shares.
After Completion of the Transaction, CSSC holds 2,007 million shares, with a shareholding ratio of 26.71%, and is the controlling shareholder of the Surviving Company, and CSSC collectively controls 3,705 million shares of the Surviving Company, with a shareholding ratio of 49.29%, and is the beneficial owner of the company.
The controlling shareholder of the surviving company remains CSSC, the actual controller remains CSSC and the ultimate controller remains the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) of the State Council, all of which remain unchanged. It is worth noting that this merger is the largest absorption merger transaction ever for A-share listed companies.
According to the data of the first half of 2024, the total assets of CSSC is RMB 174.342 billion (about US$ 24.635 billion), and the total assets of CSIC is RMB 2019.974 billion (US$ 28.539 billion).
According to the data static calculation, after the merger, the new company’s total assets will be more than RMB 370 billion ( US$ 52.281 billion ), the two companies are equal, both for China’s core enterprises in the field of naval equipment, is a real merger of the giants.
After the reorganization, the surviving company will become the world’s first flagship shipbuilding listed company leading the world in terms of asset scale, operating income scale and the number of handheld ship orders.