China's top two bullet train makers will merge, state media said Tuesday, in a move that will create a multi-billion-dollar firm as the country seeks export markets for its high-speed railway technologies.
The official Xinhua news agency confirmed the two state-owned firms, China CNR Corp. and CSR Corp., would "merge into a new company", citing an announcement filed by the latter with the Shanghai Stock Exchange late on Tuesday.
Details were not immediately available but there have been months of speculation about the deal, with the 21st Century Business Herald reporting the new entity's name as "China Railway Rolling Stock Group", citing an unnamed source.
State media has previously said it would help prevent "cut-throat" competition between the two when seeking business overseas.
The merger could also put the combined entity in a stronger position to take on the likes of Germany's Siemens and Bombardier of Canada.
Each is valued at around $13 billion, with CSR having a slightly higher market capitalisation.
The two companies, both dual-listed on the Shanghai and Hong Kong stock exchanges, had suspended their shares from trading pending "important" announcements, exchange filings show.
China's high-speed rail network was only established in 2007 but has fast become the world's largest.
The state-run China Daily newspaper said the high-speed rail network was set to reach 50,000 kilometres by 2020, with four main lines running north and south and another four east and west.
However, the network has also been plagued by graft and safety scandals.
CSR was embroiled in a 2011 scandal after a high-speed train crash near Wenzhou city killed 40 people and sparked an investigation that found evidence of bribery in railway construction.
It was also part of a consortium that won a $3.75 billion high-speed railway contract from Mexico in early November. The contract was cancelled shortly afterwards amid questions over the legality of the bidding process.
CSR's net profit rose 58.29 percent year-on-year to 3.97 billion yuan ($651 million) in the January-September period, according to the company.
CNR secured a deal in October to supply metro trains to the US city of Boston. Its net profit jumped 65.1 percent year-on-year to 3.96 billion yuan in the first three quarters of this year, the company said.
The firms share the same origin, a rail vehicle manufacturer spun off from the former railway ministry in 2000 and split into two.