On December 20, China Shenhua, a listed company on the A-share market, issued an announcement stating its plan to issue A-share stocks and pay cash to acquire shares in 12 companies held by its controlling shareholder, State Energy Investment Group Co., Ltd., and its subsidiaries. The transaction value is 133.598 billion CNY. Given its massive scale and high transaction amount, this deal has become the largest merger and acquisition case to date in the A-share market.

The overall payment ratio for this transaction is 30% in shares and 70% in cash, with the cash payment amount totaling 93.519 billion CNY.

It is understood that as of July 31, 2025, the total assets of the 12 target companies involved in this transaction amount to 233.423 billion CNY, with total net assets attributable to shareholders standing at 87.399 billion CNY. In 2024, the target assets collectively generated operating revenue of 113.974 billion CNY and achieved a net profit attributable to shareholders, excluding non-recurring items, totaling 9.428 billion CNY.

Through this transaction, China Shenhua’s coal reserves will increase to 68.49 billion tons, representing a growth rate of 64.72%; its recoverable coal reserves will rise to 34.5 billion tons, with a growth rate of 97.71%; and its coal production will reach 512 million tons, an increase of 56.57%. China Shenhua stated that the business assets involved in the transaction cover multiple sectors including coal mining, pithead coal-fired power generation, and coal chemical industries, which will help enhance the listed company’s core business capacity and resource reserves, further optimize its full-industry-chain layout, and create favorable conditions for promoting clean production, optimizing capacity matching, and improving profitability.

Resolving legacy issues and building collaborative advantages across the entire industry chain are the core focuses of this transaction.

For a long time, China Shenhua and the National Energy Group have had overlapping operations in certain business areas. Since 2005, the two parties have signed several agreements, under which the National Energy Group committed to gradually inject the relevant assets into the listed company by August 27, 2028.

This transaction marks the entry of this commitment into a substantive resolution phase. By injecting multiple core, high-quality assets in a single transaction, the listed company and its controlling shareholder will substantially resolve the overlap in their businesses across the coal, coal-fired power generation at mine sites, coal chemical industries, and logistics and transportation sectors. Prior to the transaction, under the coordinated arrangements of the State Energy Group, the target companies—including GuoCNY Power, Xinjiang Energy, Wuhai Energy, Pingzhuang Coal Industry, and Baotou Mining—had each undergone preliminary restructuring, divesting some inefficient or assets with low relevance to their core businesses. The primary types of assets involved included closed or inefficient mining rights and new energy assets.

For China Shenhua itself, this is a profound strengthening of its industrial chain. This transaction will inject a large number of high-quality assets into the company, including the Jundong Open-Pit Coal Mine—a second-largest open-pit coal mine in China—owned by Xinjiang Energy. The mine has proven recoverable reserves exceeding 2 billion tons, and its latest approved production capacity as of 2025 reaches 35 million tons per year. Its annual output can meet the entire year’s demand of two power plants each with a capacity of 10 million kilowatts.

China Shenhua stated that upon completion of the transaction, the company’s core business capacity and resource reserves will significantly increase, further perfecting its integrated “coal-electricity-road-port-navigation” full industrial chain layout. This is expected to achieve a ‘1+1>2’ effect in areas such as production synergy, cost control, and emergency supply assurance.

Coal serves as the “ballast stone” for national energy security, and the industry is now entering a new stage of high-quality development. In the current context of transformative energy dynamics, coal’s role as a safety net continues to play a critical part. For coal enterprises, engaging in mergers and acquisitions and restructuring is both a strategic move to deeply integrate resources, optimize industrial layouts, and build a resilient supply system—and a key practice for driving the transition toward intelligent, intensive, and clean operations. This approach strictly adheres to the nation’s energy strategy of “establishing new systems before dismantling old ones and planning comprehensively,” aligning with the requirements of a modern energy system that is “clean, low-carbon, safe, and efficient.”

This mega-merger is an important step taken by central state-owned enterprises to deepen restructuring and integration. It will not only enhance China Shenhua’s core competitiveness and risk resilience but also help boost the concentration of the coal industry. This move is of great significance for solidifying the nation’s energy foundation, strengthening the functions of state-owned capital, and boosting market confidence.

Note:

Acquire 12 target companies in one go, with the cash payment proportion reaching 70%.

According to the draft transaction report disclosed by China Shenhua, this acquisition involves a total of 12 target companies, covering multiple fields such as coal, pithead coal-fired power, and coal chemical industry. Specifically, China Shenhua plans to acquire 100% equity of GuoCNY Power, 100% equity of Xinjiang Energy, 100% equity of the Chemical Company, 100% equity of Wuhai Energy, 100% equity of Pingzhuang Coal Industry, 41% equity of Shenyan Coal, 49% equity of Jinshen Energy, 100% equity of Baotou Mining, 100% equity of the Shipping Company, 100% equity of the Coal Transportation and Sales Company, and 100% equity of the Port Company held by the National Energy Group through the issuance of A-shares and cash payment. And it will acquire 100% equity of Inner Mongolia Construction and Investment held by Western Energy by paying cash.

Compared with the previous transaction plan, 100% equity of the e-commerce company is not included in the acquisition scope. As of July 31, 2025, the total assets of the 12 target assets amounted to 233.423 billion CNY, and the total parent-company-owned net assets were 87.399 billion CNY. In 2024, the target assets achieved a total operating income of 113.974 billion CNY, a total non-recurring profit and loss-adjusted net profit attributable to the parent company of 9.428 billion CNY, and a total non-recurring profit and loss-adjusted net profit attributable to the parent company after excluding the impact of long-term asset impairment losses of 10.570 billion CNY, corresponding to an overall transaction consideration of 128.671 billion CNY. Considering the 4.927-billion-CNY capital increase of the Chemical Company by the National Energy Group after the assessment benchmark date, the adjusted final overall transaction consideration is 133.598 billion CNY.

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