China power producer Guodian to merge with Shenhua Coal - government

BEIJING (Reuters) - China's top-five state power producer China Guodian Group Corp will merge with coal giant Shenhua Group Corp Ltd, the Chinese government said on Monday, a deal that will create the world's largest power utility.

The deal, the latest shake-up of the country's debt-ridden state-owned sector, was announced by China's State-owned Assets Supervision and Administration Commission (SASAC) in a one-line statement that gave no other details.

The companies have been in talks about a merger for several months.

The combined groups would have an installed capacity topping 225 gigawatts, leapfrogging EDF and Enel to become the world's biggest power company by capacity, according to Frank Yu, principal consultant for Asia-Pacific Power and Renewables at Wood Mackenzie.

It would also be the largest wind power developer with 33 gigawatts of capacity and the biggest coal producer, he said.

The deal marks the start of a broader consolidation across China's state-owned energy sector as part of its efforts to make it more competitive globally, Yu said.

(Reporting by Josephine Mason; Editing by Tom Hogue)