China International Capital Corp (3908) unveiled plans on Wednesday to buy two smaller rivals in a share-swap deal worth about US$16 billion (HK$124.8 billion), as Beijing strives to build globally competitive investment banks via industry consolidation.

State-owned CICC said it would take over Dongxing Securities and Cinda Securities to broaden its business network, expand its client base and strengthen capital as it seeks to become a top-tier investment bank.

The acquisitions will create China's fourth-largest investment bank, with total assets of more than 1 trillion yuan (HK$1.1 trillion), according to Soochow Securities.

In an exchange filing, CICC said it planned to issue 3 billion China-listed shares at 36.91 yuan each in exchange for all outstanding shares of Dongxing and Cinda.

CICC shares last traded at 34.89 yuan on November 19 before trading was suspended pending details of the merger.

The transaction values Dongxing at 16.14 yuan per share, 23 percent above its last traded price of 13.13 yuan, while Cinda is valued at 19.15 yuan, an 8 percent premium.

Shares in all three companies - controlled by sovereign fund Central Huijin Investment - will resume trading on Thursday.

"The restructuring would help the company develop into a globally competitive, first-rate investment bank," CICC said, adding it would also "support China's capital market reform and high-quality growth of the securities industry".

REUTERS

Chinese bank CICC to buy two rivals in US$16 billion share-swap deal