December 22, 2005

China grain traders COFCO, CGOG in merger talks
 

Grain trading companies China National Cereals, Oils & Foodstuffs Corp. (COFCO) and China Grains & Oils Group Corp. (CGOG) are in merger talks, the head of the government agency that oversees China's large state-owned companies said Thursday.

"The business of the two corporations overlap in many respects, so I believe the merger is necessary," said Li Rongrong, director of the State-owned Assets Supervision and Administration Commission, in a press conference in Beijing.

He said a detailed disclosure on the matter would be made at "the proper time."

"The State-owned Assets Supervision and Administration Commission has already approved a merger, as far as I know, but we're still awaiting approval from the State Council," said a person at CGOG surnamed Li.

She said CGOG has begun planning for the possible merger, but no details are so far available.

A person surnamed Liu in the public relations department of COFCO also said COFCO is restructuring, but denied it relates to a prospective merger. He did not elaborate on the restructuring.

The combined company's total assets may exceed RMB60 billion (US$7.43 billion), as COFCO has total assets of more than RMB50 billion, while CGOG's assets exceed RMB10 billion.

COFCO, China's biggest grain trading and processing company, is the parent company of COFCO International Ltd., Shenzhen Baoheng (Group) Co., and Xinjiang Tunhe Investment Co.

CGOG, one of the biggest grain trading and processing companies in China, has 16 units and five research institutions with total assets.