Shares in Sinochem International rose by their 10% maximum daily limit on Thursday after the company’s parent, China’s largest chemical group, won approval to merge with its main domestic rival, reported the Financial Times.
The State-owned Assets Supervision and Administration Commission, or Sasac, overseer of China’s central government-backed industrial groups, said on Wednesday it would create a new holding company to absorb Sinochem Group and China National Chemical Corp, also known as ChemChina, said the FT.
The move, which has been in discussion for years and will create an industrial powerhouse with annual sales of more than RMB 1 trillion ($152 billion), is the latest effort by Beijing to create state-backed champions to challenge international leaders.
“The merger could help [China’s chemical industry] better handle pressure from the domestic expansion by foreign industry giants,” said Shanghai-based Huachuang Securities in a report. “It will allow China to play a larger role in the global energy, chemical and agriculture industries.”