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China gave approval for a restructuring of Sinochem Group and ChemChina Group, two companies that have been long the target of merger speculation.

The State-owned Assets Supervision and Administration Commission, which regulates the companies, announced the approval late Wednesday in a one-line statement, Bloomberg reports. In a separate statement, Sinochem said the two firms will become wholly-owned subsidiaries of a new holding company, operated by SASAC.

The move “will further optimize resource allocation, strengthen innovation and stimulate business growth,” Sinochem said. It will also aid the development of the chemical industry in China, it said.

Ning Gaoning, the chairman of both companies, said in November 2019 that they were exploring a merger and working on finance and legal matters. The deal would create an oil-to-chemicals company with more than US$100 billion in assets.

A deal to combine the two companies, and create a globally competitive powerhouse across a swathe of basic industries, has been in the works since at least 2016. China’s formal blessing on a restructuring is likely to hasten its completion, although the deal has run into complications before.

Sinochem Group headquarters in Beijing.

Sinochem Group, ChemChina restructuring approved