The Shanghai International Port (Group) Co, the Chinese
mainland's biggest port operator, plans to merge with its
Shanghai-listed unit Shanghai Port Container Co and apply for the
group's listing on the city's stock exchange, the two companies
said in a joint statement yesterday.
The proposed transaction, which must be ratified by the relevant
regulatory authorities, will make Shanghai International one of the
largest publicly traded companies on the mainland by market
capitalization. It is also expected to help boost investor interest
in the shares of other port operators, said analysts.
"Asset injections are likely to help improve the performance of
the listed units of port companies whose shares are mostly traded
at below market average multiples," CITIC analysts said in a report
commenting on Shanghai International's move.
The average price-to-earnings ratio, a common yardstick in
evaluating shares, stood at around 20 for leading domestic port
operators.
Other domestic port operators such as Tianjin Port Co and
Shenzhen Yantian Port Holdings Co are likely to receive a boost and
may lure investors following the restructure of the Shanghai Port,
they said.
Shanghai International plans to issue new shares at 3.67 yuan
(46 US cents) each and offer 4.5 such shares for every share held
in the listed unit by shareholders other than those from the group
itself or its affiliates.
These shareholders will also receive a cash alternative to
exchange every share held for 16.50 yuan (US$2.06). The cash will
be paid by an as yet undecided third party, said Shanghai
International.
The company did not say how many shares it will issue. Further
details are expected to be made available in the following weeks,
the analysts said.
The 50 percent State-owned Shanghai International has ports
measuring 21 kilometres long, 137 berths and an annual
cargo-handling capacity of 136.60 million tons, the company said on
its website. It is a major investor in the Shanghai Yangshan
deep-water port, which is under construction.
The group owns a 70 per stake in Shanghai Port Container, which
is listed on the Shanghai Stock Exchange and had 1.8 billion shares
at the end of last year.
Having completed its reform program converting State-held shares
to regular traded stock, all of its shares are now tradable, but
some are subject to a lock-up period.
(China Daily June 7, 2006)