The Shanghai International Port (Group) Co, the Chinese mainland's biggest port operator, plans to merge with its Shanghai-listed unit Shanghai Port Container Co and apply for the group's listing on the city's stock exchange, the two companies said in a joint statement yesterday.

The proposed transaction, which must be ratified by the relevant regulatory authorities, will make Shanghai International one of the largest publicly traded companies on the mainland by market capitalization. It is also expected to help boost investor interest in the shares of other port operators, said analysts.

"Asset injections are likely to help improve the performance of the listed units of port companies whose shares are mostly traded at below market average multiples," CITIC analysts said in a report commenting on Shanghai International's move.

The average price-to-earnings ratio, a common yardstick in evaluating shares, stood at around 20 for leading domestic port operators.

Other domestic port operators such as Tianjin Port Co and Shenzhen Yantian Port Holdings Co are likely to receive a boost and may lure investors following the restructure of the Shanghai Port, they said.

Shanghai International plans to issue new shares at 3.67 yuan (46 US cents) each and offer 4.5 such shares for every share held in the listed unit by shareholders other than those from the group itself or its affiliates.

These shareholders will also receive a cash alternative to exchange every share held for 16.50 yuan (US$2.06). The cash will be paid by an as yet undecided third party, said Shanghai International.

The company did not say how many shares it will issue. Further details are expected to be made available in the following weeks, the analysts said.

The 50 percent State-owned Shanghai International has ports measuring 21 kilometres long, 137 berths and an annual cargo-handling capacity of 136.60 million tons, the company said on its website. It is a major investor in the Shanghai Yangshan deep-water port, which is under construction.

The group owns a 70 per stake in Shanghai Port Container, which is listed on the Shanghai Stock Exchange and had 1.8 billion shares at the end of last year.

Having completed its reform program converting State-held shares to regular traded stock, all of its shares are now tradable, but some are subject to a lock-up period.

(China Daily June 7, 2006)