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Wednesday, December 31, 2014, 10:21

CNR, CSR stocks surge after merger news

By Xinhua /
CNR, CSR stocks surge after merger news

Visitors look at models of high-speed trains designed by China North Locomotive and Rolling Stock Industry Group (CNR) on display at the China International Rail Transit Exhibition in Shanghai on Aug 23, 2011. (CHINA OUT AFP PHOTO)

BEIJING - Stocks of China's two railway giants soared by the daily 10 percent limit after they resumed trading on Wednesday following the overnight merger announcement.

Under the merger plan, CSR Corp. Ltd. would fully acquire CNR Corp. Ltd. through a swap of the Hong Kong and Shanghai shares of the two companies -- every share of CNR will be exchanged for 1.1 shares of CSR, the state-owned companies announced late Tuesday on the Shanghai Stock Exchange website.

CSR and CNR together once controlled China's entire high-speed rail market. They have produced about 80 percent of cargo trains in China and the majority of subway trains.

The new company, which will inherit all the assets, liabilities, businesses, staff, contracts, certificates as well as all other rights and obligations of the two companies, will be named CRRC Corporation Ltd.

Shares in the two companies suspended trading since October 27.

The merger comes after two months of government review and preparation, officially ending an era in which the companies often cut into each other's profit in the global market.

Wang Mengshu, an academic at the Chinese Academy of Engineering and an ardent supporter of the move, said the domestic market for high-speed trains is quite saturated, so the merger will prevent unhealthy price competition in the world market.

"The new group will have a clear edge over global rivals by being able to optimize the two rail product manufacturers' technological edges, human capital and production capacity," said Wang.

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