China's State Council has approved the proposed 3 billion Chinese yuan merger of two of the Asian nation's largest steelmakers, Baoshan Iron & Steel Co. Ltd. and Wuhan Iron & Steel Co. Ltd., Shanghai Daily reported Sept. 23.
The newly formed company will be named China Baowu Steel Group, which will be 52.1% owned by Baosteel and 13.48% owned by Wuhan Iron.
Baosteel earlier confirmed the merger will go ahead via an equity swap and issuance of A shares to Wuhan Iron.
According to a China Securities Journal report, Baoshan will buy Wuhan Iron at 2.56 Chinese yuan per share by issuing new shares at 4.60 yuan per share.
Wuhan Iron shareholders will have the option of receiving 4.60 yuan per share in cash in lieu of Baosteel shares.
Meanwhile, Shanghai Daily also reported that the listed companies of Baosteel, including Xinjiang Ba Yi Iron & Steel Co and Shanghai Baosteel Packaging Co, planned to issue 5,650,000,000 shares at 4.60 yuan each in exchange for Wuhan Iron shares.
As of Sept. 22, US$1 was equivalent to 6.67 Chinese yuan.