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China’s leading state-owned energy and coal company announced plans to make the largest asset acquisition in the country’s energy history, with a total investment of 133.6 billion yuan (approximately $19 billion).
The company will pay 93.5 billion yuan (about $13.3 billion) in cash and issue new shares valued at 40.1 billion yuan to acquire 12 key subsidiaries from its controlling shareholder, a Beijing-based energy firm, late on December 19.
The new shares are priced at 29.40 yuan (around $4.18) each, representing a 28% discount on the stock’s closing price of 40.59 yuan ($5.78) in Shanghai on December 19. The stock closed slightly higher at 40.88 yuan ($5.83) today, while its Hong Kong-listed shares dipped 0.6% to HKD 39.44 ($5.07).
Additionally, the company plans to issue up to 35 new shares to outside investors, raising a further 20 billion yuan (about $2.9 billion). These funds will primarily cover part of the cash payment and associated deal costs, with pricing yet to be determined.
Once completed, expected by the end of next year, the deal will increase the energy firm’s ownership stake in the company from 69.5% to 71.5%.
The acquired assets cover the entire coal value chain, including mining, power generation, chemicals, port shipping, and logistics. The move aims to strengthen its core coal operations and improve integration across coal power, coal liquidation, and downstream polyolefin manufacturing.
This acquisition will nearly double the company’s coal reserves from 41.58 billion tons to 68.49 billion tons, boost recoverable reserves from 17.45 billion tons to 34.5 billion tons, and raise annual coal production from 327 million tons to 512 million tons.
Furthermore, the company’s installed thermal power capacity will grow from 47.63 GW to 60.88 GW, and its yearly production capacity for coal-based polyolefins will increase from 600,000 tons to 1.88 million tons.
The combined revenues of the targeted subsidiaries totaled 114 billion yuan last year, with net profit after adjusting for non-recurring gains and losses reaching 9.4 billion yuan (around $1.3 billion). When including the impacts of long-term asset impairment, net profit was approximately 10.6 billion yuan.
The company reported a net profit of 60.1 billion yuan on operating revenue of 338.4 billion yuan in its most recent annual financial statement.
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