Feb. 17 (Bloomberg) -- 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, rallied to 16.18 yuan, the highest close 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 was little changed.
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 climbed 7 percent today, taking its gain this year to 26 percent. That compares with a 17 percent increase in the Hang Seng Index.
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