MOFCOM Imposed Conditions on SOEs – GE/Shenhua Deal

Only 10 days after its conditional clearance of the Alpha V/Savio deal, the Ministry of Commerce (MOFCOM) published, on 10 November 2011, the third conditional merger clearance of this year approving the proposed joint venture between General Electric (China) Ltd. (GE China) and China Shenhua Coal to Liquid and Chemical Co., Ltd. (CSCLC). ^[1]

This is the first conditional decision relating to a Chinese Stated-owned enterprise (SOE) and the number of MOFCOM’s conditional clearance decisions is lifted to nine in total. According to MOFCOM’s announcement, the review process lasted for about 7 months starting from April 13 when the notification was first submitted to MOFCOM.

Parties and Transaction. The proposed transaction was announced as early as January, 2011 as part of President Hu Jintao’s state visit to the United States. ^[2] GE China and CSCLC are to establish a 50/50 JV mainly to license coal-water slurry (CWS) gasification technology to industrial and power projects in China. GE Infrastructure Technology, another subsidiary of GE will license GE’s CWS gasification technology to the proposed JV.

The parent company of CSCLC – Shenhua Group Corporation Limited (Shenhua Group) is a State-owned mining and energy company in China. Its core businesses include production and supply of coal, electricity and heat, as well as rail and port transportation services.