Shanghai Friendship Group (600827.SH) will merge with rival department store Shanghai Bailian (600631.SH) through a stock swap worth about US$2.4 billion in total, Bloomberg reported. The deal was engineered by the Shanghai government, which is consolidating state-owned companies in order to boost competitiveness. Friendship will offer 0.86 share for each share in Bailian, the companies said in statements to the Shanghai Stock Exchange. Friendship will use another US$705 million worth of shares to buy a stake in Nextage Department Store and to boost its ownership of Lianhua Supermarket Holdings (0980.HK) from 34% to 55%. The share swap will give Shanghai Balian’s parent company, Bailian Group, a 49.26% holding in Friendship, up from 27.3%. This could later rise to 57.71%. Friendship and Bailian shares rose 10% and 9.1% Thursday as they resumed trading after a near four-month hiatus. Lianhua shares were suspended from trading in Hong Kong.
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