Rail & Bridge Jumps Before Merger: Shanghai Mover

(Corrects company name from first paragraph.)

Rail & Bridge International Co. rose by the 10 percent daily limit in Shanghai trading before its proposed merger with China Communications Construction Co., the country’s biggest port builder.

Rail & Bridge, an infrastructure construction company, rose to 16.18 yuan at the 11:30 a.m. trading break, the highest intraday level since March 2008. The shares resumed trading today after a suspension since Jan. 30 and will be halted again from Feb. 21 for shareholders to exercise their options. The benchmark Shanghai Composite Index (SHCOMP) fell 0.1 percent.

China Communications, a Beijing-based infrastructure company, said yesterday it will issue 1.3 billion shares at 5.40 yuan in its IPO and buy all the stock in Rail & Bridge that it doesn’t already own. Rail & Bridge shareholders can opt to receive China Communications shares at a ratio of 2.69 to one, or receive a cash payment of 12.29 per share, according to a statement to the exchange yesterday.

“The stock is rising because China Communications is going to merge the company through a share swap,” Vivian Liu, an analyst at Sinopac Securities Asia Ltd., said in a phone interview in Shanghai. Through the transaction, Rail & Bridge shareholders will get access to the larger company’s dredging and port machinery operations, Liu said.

China Communications, which already owns 61.06 percent of Rail & Bridge, had delayed its Shanghai IPO last year amid weakness in the stock market, Chairman Zhou Jichang said in July.

The company’s Hong Kong-traded shares have gained 23 percent this year, compared with a 16 percent increase in the benchmark Hang Seng Index. The IPO (1800) will be the largest for China this year, according to data compiled by Bloomberg.

To contact the reporter on this story: Jiang Jianguo in Shanghai at jjiang@bloomberg.net

To contact the editor responsible for this story: Shiyin Chen at schen37@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.