The combined assets of the two companies are estimated to be worth between 1.73 trillion yuan ($254 billion) and 1.8 trillion yuan ($273 billion), China Daily said.
Wu Lixin of the China Coal Research Institute said the merger will allow Shenhua to move into clean energy while Guodian will benefit by keeping away from issues related to supplies and prices, the news site reported.
China's State-owned Assets Supervision and Administration Commission (SASAC) announced plans in February to reorganise China's SOEs to improve their operational efficiency and profitability.
The government has reorganised 22 central SOEs, including China Ocean Shipping (Group) Co and China Shipping Group, CNR Corp and CSR Corp, over the past three years. It also established new businesses such as AECC Commercial Aircraft Engine Co and China Tower Corp in 2016 and 2014, respectively, SASAC said.
SASAC is keen to reduce overcapacity, and deal with low commodity prices and financial losses through reorganisation and reforms to allow mixed ownership of the businesses, the Chinese state council said
