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Shares skyrocket on China train firms mega merger | Shares skyrocket on China train firms mega merger |
(about 1 hour later) | |
Chinese listed shares of the world's largest train makers skyrocketed on Wednesday after the firms announced plans to merge. | Chinese listed shares of the world's largest train makers skyrocketed on Wednesday after the firms announced plans to merge. |
China CNR and CSR said they would merge to create a $26bn (£16.7bn) firm to compete with giants like Canada's Bombardier and Germany's Siemens. | China CNR and CSR said they would merge to create a $26bn (£16.7bn) firm to compete with giants like Canada's Bombardier and Germany's Siemens. |
Shares of CNR jumped 45% in Hong Kong, while its Shanghai stocks were up at the daily limit of 10% on Wednesday. | |
CSR shares were also up over 32% and 10% in both indexes respectively. | CSR shares were also up over 32% and 10% in both indexes respectively. |
The companies shares surged despite a private survey that showed manufacturing data in the world's second largest economy had contracted for the first time in seven months in December. | The companies shares surged despite a private survey that showed manufacturing data in the world's second largest economy had contracted for the first time in seven months in December. |
Their shares had been halted from trade on 27 October and a statement was issued about trading resuming on 31 December. | Their shares had been halted from trade on 27 October and a statement was issued about trading resuming on 31 December. |
State-owned giants | State-owned giants |
Both state-owned firms are the biggest of its kind in the world because of booming domestic sales. | Both state-owned firms are the biggest of its kind in the world because of booming domestic sales. |
The new company would have a combined annual revenue of about $32.7bn based on 2013 statistics, compared with Siemens' $96.5bn and Bombardier's $18.2bn revenues last year, according to Reuters. | The new company would have a combined annual revenue of about $32.7bn based on 2013 statistics, compared with Siemens' $96.5bn and Bombardier's $18.2bn revenues last year, according to Reuters. |
The merger would help them compete for global rail deals, the companies said in a joint statement on Tuesday. | The merger would help them compete for global rail deals, the companies said in a joint statement on Tuesday. |
"The merger is expected to improve efficiency in the use of resources, effectively reduce operating costs and realize the internationalization strategy, thereby promoting competition globally," it said. | "The merger is expected to improve efficiency in the use of resources, effectively reduce operating costs and realize the internationalization strategy, thereby promoting competition globally," it said. |
In October, CNR gained global attention after it was awarded a deal to supply trains to major US city Boston. | In October, CNR gained global attention after it was awarded a deal to supply trains to major US city Boston. |
CSR, meanwhile, was a part of a consortium that got a $3.75bn high-speed railway contract from Mexico in November, but that was cancelled over controversy in the bidding process. | CSR, meanwhile, was a part of a consortium that got a $3.75bn high-speed railway contract from Mexico in November, but that was cancelled over controversy in the bidding process. |
The merger still requires approval by shareholders and Chinese authorities. | The merger still requires approval by shareholders and Chinese authorities. |
Both firms were spun off from the former railway ministry in 2000. | Both firms were spun off from the former railway ministry in 2000. |
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