DALIAN, China -- Four listed Chinese shipping subsidiaries will realign their businesses in response to the merger between China Ocean Shipping (Group), known as Cosco Group, and China Shipping Group.
China Cosco Holdings is selling its entire stake in a bulk shipping company to parent Cosco Group for 6.77 billion yuan ($1.04 billion). Meanwhile, Cosco Pacific will buy a port operator from China Shipping Container Lines for 7.63 billion yuan. After all necessary deals are completed, China Cosco will specialize in container shipping and Cosco Pacific in operating ports.
China Shipping Development, owned by China Shipping Group, will focus on transporting petroleum products, liquefied natural gas and other items, while fellow group company China Shipping Container Lines will deal with maritime financial services.
The companies hope to gain an edge by eliminating any overlaps. China Shipping Development is expected to become one of the world's largest transporters of LNG, and the other three likely will become key players in their respective industries as well.
The four shippers also technically will improve their financial position by transferring unprofitable businesses to their unlisted parent companies, but investors could have a harder time determining what's really going on behind the books.
The merger between Cosco Group and China Shipping Group will create the world's fourth-largest shipping company by capacity.