China’s state-owned train manufacturing companies China CNR and CSR Corporation have decided to merge in a bid to form a $26bn company.
The companies said this amalgamation will help them to compete with rivals in the market, including firms such as Bombardier and Siemens, Reuters reported.
It is estimated that the new company will have combined annual revenue of approximately $32.71bn. Last year, revenue of Siemens and Bombardier were $96.5bn and $18.2bn respectively.
BBC News cited a joint statement by the companies that read: "The merger is expected to improve efficiency in the use of resources, effectively reduce operating costs and realise the internationalisation strategy, thereby promoting competition globally."
In 2000, the Chinese government separated these companies in order to increase competition in the country’s train manufacturing market. This merger would help the country to successfully market its high-speed technology abroad.
Both companies currently have annual revenues of $16bn each and a combined market capitalisation of $26bn.
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Italian industrial group Finmeccanica recently shortlisted China’s CNR Corporation, along with Japan’s Hitachi, for the sale of its unprofitable railway subsidiaries.
In October, China CNR received a $430.2m contract to deliver 284 metro cars for Boston’s Red and Orange Lines as part of its joint venture with CNR Changchun Railway Vehicles. This was its second project from developed countries in Europe and America since the France wagon project won in 2011.