CHINA Merchants has taken over Sinotrans, according to a report by Xinhua News Agency.

The official news outlet said China Merchants will reorganise Sinotrans and then merge one of China's largest freight forwarders into China Merchants, which is the mainland's largest port operator.

The report said the enterprise planning section of China Merchants is drawing up a plan to integrate the two companies.

Xinhua said it tried to contact China Merchants Headquarters in Hong Kong for comment, but the company refused to say anything.

The news agency quoted other sources which said China Merchants is now studying how the two companies can be merged.

The report also quoted analysts who said the merger of the two companies represents the beginning of the reorganisation of China's major state owned enterprises.

Another point the report made was that this merger of the two companies would not affect the operation of China Merchants and Sinotrans Hong Kong-listed entities.