Logo of Shenhua Group Corp is pictured in Tianjin, May 17, 2015.[Photo/VCG]

China's biggest coal producer Shenhua Group said it has no information on possible merger with Datang and the company will issue a statement if there is any development, China Economic Net reported.

China's State-owned enterprise regulator the State-owned Assets Supervision and Administration Commission (SASAC) has asked coal mining giant Shenhua Group Corp and power generator China Datang Corp to discuss a possible merger, Bloomberg reported Wednesday.

The talks are at an early stage and there's no guarantee of a deal, Bloomberg said, citing people familiar with the matter.

If successful, the merger would combine China's biggest coal producer with one of its largest power generators to create a utility giant with about 1.66 trillion yuan ($241 billion) of assets, Bloomberg reported.

China Shenhua Energy Co, Shenhua's Hong Kong-listed company, said earlier that its 2016 net profit rose 40.7 percent and expected first-quarter net profit to climb at least 50 percent.

The company also surprised markets by announcing a generous special dividend, a total of 59 billion yuan in cash, thanks to a surge in coal prices last year.

Furthermore, Shenhua's recent management reshuffle also raised expectation that the company may be involved in a possible merger.

Datang's assets totaled 729.5 billion yuan and its power-generation capacity totaled 127.17 gigawatts in 2015, according to its websites.

China will prioritize and accelerate the restructuring of steel, coal and power businesses in its major State-owned enterprises to improve operational efficiency and enhance the profitability of State assets, head of the SASAC Xiao Yaqing earlier said.

The central government reorganized 22 central SOEs, including China Ocean Shipping (Group) Co and China Shipping Group, CNR Corp and CSR Corp, over the past three years.