Rail & Bridge Jumps Before Merger: Shanghai Mover
(Corrects company name from first paragraph.)
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.
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