China train.jpg (Photo : Reuters)
The Chinese government is working on the plan to merge China's biggest trainmakers CSR Group and China Northern Locomotive & Rolling Stock Industry Group Corp.
Government sources involved in the transactions but requested to remain incognito said that the merger will allow China to acquire more contracts from abroad.
No further details of the plan have been publicized, but what is certain is that China International Capital Corp., a large investment bank in the country, is drafting the plan for the merger.
Once the two companies are combined, the new company will have a market value of $26 billion, according to an analysis by Bloomberg. Considering the conglomerate's sales in the past 12 months, the Chinese government is soon to create a company with $33 billion sales that earned $1.44 billion.
The merging of the two trainmaking tycoons is China's move to show a dependable backbone to the emerging markets it is courting.
In recent months, Premier Li Keqiang has made deals with countries from different continents to manufacture their train cars and tracks. China will make Russia's high-speed railway line, will manufacture 284 new rail cars for Boston and will sell six bullet trains to Macedonia, among other projects.
With the merger of these top trainmakers, China will have a company that can compete with Japan's Kawasaki Heavy Industries Limited, Nippon Sharyo Limited and Hitachi Limited.
