Headquarters of Shenhua Group in Beijing, China. Photo: AFP

As part of Beijing’s continued push to cut overcapacity and the number of state-owned enterprises, coal producer Shenhua Group and power utility Guodian will merge, authorities announced (link in Chinese) Monday.

The new entity will be the world’s second-largest company by revenue, with US$271 billion in assets, and the largest by installed capacity, according to Bloomberg.

The announcement on Monday confirms widespread speculation of the merger and of Beijing’s movement toward broader consolidation of the industry, with some speculating we can expect more mergers in the sector to come.

Shenhua’s Hong-Kong listed subsidiary China Shenhua Energy Co rose by as much 4.7% before closing up 2.1%.