Xu Lirong to Head COSCO-CSC Conglomerate

CSCL
CSCL Globe (file photo)

By MarEx 2016-01-04 19:15:41

Xu Lirong, group chairman of China Shipping Company, will head the newly combined China Cosco Shipping Group, confirming reports in December that he might be the chief of the new entity. China's state assets control agency announced his new position in a post on its blog Monday.

Mr. Xu had worked closely on the merger plan with Ma Zehua, chairman of Cosco Group, who will likely retire in one year.

Xu started his career with Cosco in 1975 before moving over to CSC, and served with increasing responsibility, including as chief executive of CSCL. He took the top group chairman post in 2011.

The merged company will be the largest shipowner in the world, with $75 billion in assets and nearly 800 vessels. It will be the largest player in dry bulk and tanker operations by fleet size, and the fourth largest operator of container vessels, following closely after CMA CGM.

The proposed structure of the COSCO-CSG merger was released December 11, and investors and analysts have reacted to the details with mixed reviews.

China COSCO emerged in possession of all container shipping assets. The container market has been persistently weak for some time and is not expected to improve, and investors sent China COSCO stock down by a fifth when trading of the companies resumed mid-December. Its share price has steadily declined since.

CSCL is set to acquire the container leasing, banking, and manufacturing units of the two conglomerates. These assets are viewed as the non-core businesses in the merger. CSG's bulk and oil shipping company, China Shipping Development, will sell its bulk shipping assets for book value, and will take on COSCO Dalian's tanker fleet.

The COSCO-CSC tieup is happening at the same time as the merger of Sinotrans and China Merchants Group, which will make subsidiary China Merchants Energy Shipping as the largest operator of Very Large Crude Carriers (VLCCs) in the world.