11 Mar 2010 06:38

Angang hopes to speed up merger with Bengang

Shanghai. March 11. INTERFAX-CHINA - Anshan Iron and Steel Group Corp. (Angang) aims to make a breakthrough in the ongoing merger with fellow Liaoning Province-based steel mill Benxi Iron and Steel Group (Bengang) this year, state media reported on March 10.

Zhang Xiaogang, general manager of Angang, and Yu Tianchen, president of Bengang, both expressed confidence in completing the merger between the two companies, saying that strategic cooperation is necessary and more likely to happen in the present climate, according to a China Securities Journal report.

"As far as I know, we have yet to finalize the details, including the time frame for the merger. The government as well as the two companies may resume merger discussions after China's National People's Congress and the Chinese People's Political Consultative Conference," an official, surnamed Wang, from the Liaoning branch of the State-owned Assets Supervision and Administration Commission (SASAC) told Interfax.

Representatives from Angang were unavailable for comment when contacted by Interfax.

"It will not be easy for Angang and Bengang to complete the merger. As Angang is owned by the central government and Bengang is owned by the local government they need to agree on where tax revenue will go and how to redistribute their employees, which will be complicated," Wei Zengmin, an analyst from Mysteel Information, told Interfax.

Wei highlighted the violent protest in July 2009 at Tonghua Iron and Steel Group (Tonggang) as an example of what can go wrong. When privately-run Jianlong Steel Holdings Co. Ltd. (Jianlong Steel) attempted to take a controlling stake in Tonggang, disgruntled employees staged a violent protest, causing the death of Chen Guojun, a senior manager of Jianlong Steel. As a result Jianlong Steel pulled out of the deal.

"Angang and Bengang began merger talks several years ago. In 2005, they consolidated financial statements, but they still have separate businesses. Now, as the steel industry consolidation in Shandong and Hebei provinces is advancing successfully, Angang may be feeling the heat," Song Hongbin, a department manager from Mysteel Information, told Interfax.-XH