The agreement between the two companies was approved by the Chinese government, according to a notice by the state-owned Assets Supervision and Administration Commission (SASAC). Both groups belong to the 300 state-owned companies considered as strategic by the Chinese government.
The deal is part of an ambitious plan by China under president Xi Jinping’s leadership to revamp its lumbering and debt-ridden state sector, with the goal of creating globally competitive multinationals through mergers, asset swaps and sweeping management reforms. Such big scale mergers have already been observed lately in China in various areas such as the railway manufacturing and steel industries.
CNBM is China’s leading building materials group mainly engaged in cement, lightweight building materials, fibreglass and composite materials, and engineering services. CNBM owns 200 solely owned and joint venture subsidiary companies.
Already focused on international expansion, Sinoma is China’s leading non-metal materials manufacturer and second building materials group. Currently one of the biggest cement engineering system integrated service providers in the world, its overseas business now accounts for more than 70% of the total.
In a press release formalizing the merger agreement, the new group declares a total production of “530 million tons of cement clinker, 430 million m3 of ready-mixed concrete, 2 billion m2 of plasterboard, 1.78 million tons of fibreglass, and 16 GW of wind turbine blades per year, all of which rank the first in the world.” It also claims the leadership in the international cement engineering market and the international cogeneration market.
With the merger completion, the two groups will integrate their activities in the composite fibres and glass sectors. CNBM is the parent company of CCGC, the China Composites Group Corporation, its main company in the composite materials industry, whose products serve in various sectors including energy, construction, transportation and chemical industries. CCGC is the main manufacturer of glass fibre mat in China, and is also a major producer of wind blades and carbon fibre. It is also the organizer of the biggest composites expo in the Asia-Pacific region – China Composites Expo, held each year in September in Shanghai.
In terms of advanced materials, CCGC notably co-owns Zhongfu Shenying Carbon Fiber, a joint venture established with Lianyungang Yingyou Textile Machinery and Jiangsu Aoshen Group, which specializes in the research and production of PAN precursor, carbon fibre and the corresponding composite material products.
CNBM also owns Jushi Group, a leader in the global fibreglass industry, which started to produce internationally in 2014, with the implementation of a new plant in Egypt and the launching of a new plant project in the United States.
For its part, Sinoma owns Taishan Fiberglass, whose leading products cover several different types and specifications, notably E-glass roving, chopped strand mat, yarn, electronic fabric, chopped strands, multiaxial fabrics, knitted fabrics, woven roving. Its products are exported to over 60 countries and regions, including the United States, Europe and the Middle East.
The new conglomerate will be renamed China National Building Material Group (CNBM Group), and has announced owning total assets worth 550 billion yuan, employing 250,000 persons and generating an annual income of 300 billion yuan.
The shareholders of the 14 listed companies owned by both groups have been notified that the merger’s modalities and conditions have not been defined yet. The scope of the new giant group will certainly take time to settle.