China’s Two Largest Trainmakers Plan to Merge in Share Swap

China’s two biggest trainmakers said they plan to combine through a share swap, a move intended to boost exports of the country’s high-speed rail technology. The merger between China CNR Corp. (6199) and CSR Corp. (1766) will be at a ratio of 1.1 CSR share for every CNR share, the companies said in a joint statement today. The conversion price for CNR is equal to 6.19 yuan per share or HK$8.05 for its Hong Kong-listed shares, they said in a filing to the Shanghai exchange. The proposal to combine the two trainmakers comes as competitors such as Germany’s Siemens AG and France’s Alstom SA (ALO) are facing constrained public spending in developed markets. China is competing aggressively for overseas rail projects, targeting emerging markets in Africa, Eastern Europe, Latin America and Southeast Asia while also pitching for high-profile projects in the developed world. Chinese Premier Li Keqiang has touted the country’s rail engineering and construction companies on overseas trips, signing a number of deals on his visits. Shareholders who object to the proposal have the option of receiving HK$7.32 for every CSR H-share they hold or HK$7.21 for ever CNR H-share. CNR said its board approved the plan. Shares of CNR and CSR were halted for trading on the Hong Kong and Shanghai exchanges Oct. 27. Both companies’ shares will resume trading tomorrow. To contact Bloomberg News staff for this story: Clement Tan in Hong Kong at ctan297@bloomberg.net; Feifei Shen in Beijing at fshen11@bloomberg.net; Jonathan Browning in Hong Kong at jbrowning9@bloomberg.net To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net Michael S. Arnold, Brendan Scott

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