中国推动国有企业兼并重组

M and A is always something that gets investors excited. A more-than-usual number of companies in China are merging or being acquired by others, to take advantage of rising stock prices.

After China's food business giants Shanghai Bright Food Group and Liangyou group announced plans to merge, the stock prices of the four Bright Food listed companies jumped by more than 20 percent in the following two weeks.

That's part of a rising trend of mergers among the country's public companies. More than 1,500 mergers have been carried out this year, including ones involving well known state-owned companies like Bright and Liangyou.

The government has been pushing the SOEs to merge, and a spokesperson for Bright Food says the new combination will help both companies.

"In the past we didn't have much of a grain storage system in our company, but Liangyou has a very well-developed system. So after the merger, we can help improve each other's business," said Pan Jianjun, PR manager of Bright Food Group.

Company stock performing well after merger plans are revealed is nothing new in China.

The merger between railway giants CNR and CSR attracted great attention, and the stocks of the two companies have been rising ever since rumors of the merger came out at the end of last year.

The government has been pushing reforms and structural upgrades in the economy, and companies are responding.

Data shows there were an average of 16.3 M&As on every trading day for the first three months of the year. The number has grown to more than 25 a day in the past two weeks. One analyst says the Chinese markets need to see more mergers among quality companies.

"I think more mergers is a good thing. It will help return value to the market and allow it to do better perform an important market function," said George Ren, partner and vp of Roland Berger Enterprise Managemet.

"I think with the size of the capital market in China, we should see more heavyweight mergers. Nowadays the government is pushing for a lot of mergers, and I hope that in the future, the market will play a more important role in these mergers too."

The government has set a goal of reducing the number of state-owned companies in the country from 112 to 40. Many expect the government will increase the speed of privatization of SOEs or push more of them into mergers to meet the target.