Baosteel will become the biggest canmaker in China after being given approval to buy its rival CPMC Holdings.

The deal, which was valued in December at HK$7.65 billion (US$978 million), indicates that a rival bid by ORG Technology, a part-owner of CPMC, had not materialised. The combined operations will have yearly sales of about US$2.5 billion.

The Hong Kong Stock Exchange (HKEX), on which CPMC is listed, announced the takeover after China’s State-owned Assets Supervision and Administration Commission (SASAC) gave it the green light. SASAC is a powerful organisation through which the Chinese government exercises its industrial policy.

All shares of Hangzhou-based CPMC will transfer to Champion Holding, a unit of Baowu Steel Group, itself part of Baosteel. That includes a 24% holding ORG had held in its smaller rival.

The acquisition doubles the number of plants operated by Baosteel, making it the biggest-ever consolidation in the Chinese canmaking market. It comes as the industry is experiencing a softening as the country battles weakening economic growth, and rising unemployment and prices. A crisis in China’s property market, which is a key driver of the economy, also threatens to derail consumer spending on everything from canned drinks to cars.

CPMC operates 11 beverage can and end-making plants in China as well as its Benepack business in Europe, which operates a two-line aluminium beverage can plant in Belgium. A further plant is under construction in Makó, Hungary. That project was instigated last year as a joint venture between ORG and CPMC associate COFCO Packaging.

Baosteel, through its canmaking subsidiary Shanghai Baosteel Packaging, already operates 10 beverage can and end-making plants: in Shanghai, Hebei, Wuhan, Chengdu, Foshan, Henan, Guizhou and Harbin. It also opened a plant in Cambodia in 2022. 

ORG produces 15 billion aluminium cans a year from 11 plants in China as well as 9 billion three-piece tinplate food, beverage and general line cans. 

CPMC was created in 2007 from the Chinese government’s COFCO food ministry. It went public in 2009 and has traded as a private concern ever since, although COFCO remained its major shareholder.

SASAC’s approval of the takeover ended a three-month standoff between Baosteel and ORG, until now China’s largest canmaker. ORG submitted interest in making a rival offer a week after Baowu notified HKEX of its intention to buy CPMC. However, ORG didn’t follow through with a firm offer.