The top three domestic M&A transactions are still traditional industries, but new economic industries such as information communications, media and the Internet rank at the forefront with a cumulative transaction volume of more than 50 billion and a number of transactions of more than 100, reflecting the M&A activity in the new economic market. .
01 Market statistics
- html In September, the domestic M&A market completed 188 domestic mergers and acquisitions, and completed 25 cross-border mergers and acquisitions. The total domestic mergers and acquisitions transaction volume was 131 billion yuan, a month-on-month increase of 93%, and the average transaction value per transaction was 700 million yuan. Domestic mergers and acquisitions Market trading boom has returned to its high point . htmlIn September, the concentration of transactions in the domestic M&A market was still high , with the top ten transactions accounting for 71% of the total transaction value.
- In terms of industries, the top three domestic M&A transactions so far this year are still in the traditional industry , but new economic industries such as information communications, media and the Internet are at the forefront with a cumulative transaction volume of more than 50 billion and a number of transactions of more than 100. Reflects the activity of mergers and acquisitions in the new economic market.
02 Regulatory trends
Committee on Foreign Investment in the United States: Expanding the scope of mandatory reporting transactions
html On September 17, the new proposal of the Committee on Foreign Investment in the United States (CFIUS) added new regulations to expand the scope of mandatory reporting transactions. The previous regulations required U.S. companies involving critical technologies to have mandatory reporting obligations only when conducting transactions involving 27 specific industries. CFIUS now proposes to add a new category of mandatory reporting transactions: investors who are not directly or indirectly held by the U.S. government to hold more than 49% of the equity. , if more than 25% of the voting rights of a US company involving critical technology, critical infrastructure or sensitive personal data are obtained, the transaction requires mandatory notification.China Securities Regulatory Commission: Proposed "12 Articles" of Capital Market Reform
html On September 9th and 10th, the China Securities Regulatory Commission held a symposium on comprehensively deepening the capital market reform and proposed "12 Articles" of capital market reform. Yi Huiman, Secretary and Chairman of the Party Committee of the China Securities Regulatory Commission Speaking at the symposium. The focus of the reform includes promoting the reform of the GEM and accelerating the reform of the New Third Board; significantly increasing the cost of illegal activities such as providing false certificates by intermediaries; steadily implementing the registration system and improving the basic market system.Li Chao, Vice Chairman of the China Securities Regulatory Commission: Steadily advancing the reform of the futures market
htmlOn September 2, Li Chao, Vice Chairman of the China Securities Regulatory Commission, said at the China International Futures Forum that he will steadily advance the reform of the futures market from five aspects: First, increase Variety supply; second, improve operational quality; third, expand market opening and deepen international cooperation at all levels; fourth, improve market legal systems; fifth, strengthen risk prevention and control.03 Popular transaction comments
- Hong Kong Stock Exchange gives up its acquisition of London Stock Exchange
Recently, Hong Kong Stock Exchange announced that it will not continue its acquisition offer for London Stock Exchange. Since the Hong Kong Stock Exchange proposed a merger offer for the London Stock Exchange on September 11, and the London Stock Exchange's board of directors rejected the offer on September 13, the market has paid great attention to the transaction. Li Xiaojia, President of the Hong Kong Exchange, expressed his regret for abandoning the transaction in his blog, and said that he will continue to actively promote strategic planning from three directions: based in China, connecting to the world, and embracing technology.
Hanergy Comments: The Hong Kong Stock Exchange has continued to innovate in recent years to attract a wider group of investors and companies, such as allowing different rights for the same shares, unprofitable biotechnology companies to list in Hong Kong, and opening the "Shanghai-Hong Kong Stock Connect", "Shenzhen-Hong Kong Stock Connect" and so on. If the "marriage" with the London Stock Exchange comes to fruition, it will be an important move to open a new chapter in the reform of the Hong Kong Stock Exchange. However, the difficulties of major cross-border transactions are also reflected in this transaction, such as: (1) communication and transaction strategies with the counterparty’s board of directors, shareholders and other relevant parties; (2) selection of valuation and payment methods, that is, the proposed The attractiveness of the transaction; (3) Other considerations such as supervision and corresponding risk allocation and delivery arrangements. In particular, this transaction also involves the London Stock Exchange's consideration of another alternative transaction, which further increases the difficulty of the transaction.
- Suning.com completed the acquisition of Carrefour China's controlling stake
Hanergy Comments: In the context of online and offline integration of the retail industry, this merger is an important transaction for China's leading retail company to integrate foreign retail entities. From a business logic point of view, it can help Suning.com expand its categories and improve its customer base, and it can also further strengthen its competitiveness in stores, supply chains, warehousing, etc. From the perspective of transaction logic, both the buyer and the target are mainly engaged in domestic operations. Therefore, although it is a cross-border transaction in form, it will be relatively difficult in terms of transaction judgment, transaction promotion and subsequent integration. On the other hand, the lock-up period restricts transfers to third parties and arranges sale options and purchase options, laying a good foundation for stable cooperation and potential follow-up transactions between the two parties.
- Quantong Education terminates the acquisition of Ba Jiuling
Hanergy Comments: In recent years, the overall review of A-share mergers and acquisitions has maintained a tightening situation, and with the gradual manifestation of historical issues in past mergers and acquisitions, it can be expected that this trend will continue within a certain period of time. At present, inquiry letters from exchanges have become an important regulatory tool, and various issues that cause important concerns are often raised in the early to mid-stage of a transaction. In addition, media attention has become another important means of supervision. For example, media briefings that need to be held in situations such as restructuring and listing will also explore and raise issues of concern from a professional perspective. Therefore, both parties to the transaction need to refer to similar or recent transactions before the transaction to predict possible regulatory concerns in order to make preparations or adjust arrangements in advance.
- Huacan Optoelectronics plans to sell Harmony Optoelectronics
Hanergy Comments : The previous acquisition transaction has attracted widespread market attention, and its characteristics are: (1) IDG USD Fund led the privatization of MEMSIC Semiconductor and divested part of its business; (2) Everbright and IDG RMB Fund, Cooperate with IDG USD funds and management teams who are willing to participate in listed company transactions to receive the target equity first; (3) Huacan Optoelectronics will issue shares for acquisition, of which IDG USD Fund is an important shareholder of Huacan Optoelectronics. The characteristics of this proposed sale transaction are: (1) it is still within the performance commitment period of the previous acquisition; (2) the financing and equity structure of the counterparty have not yet been determined, etc., which deserves continued attention.
- Tianxiaxiu's backdoor merger with S T Huiqiu was approved by the China Securities Regulatory Commission
Hanergy Comments: ST Huiqiu has gradually transformed into a "shell" due to historical factors such as weak main business, various violations, and unclear transformation direction. After taking control of the market, Tianxiaxiu achieved the goal of revitalizing shell resources and successfully securitizing in less than a year, which has good reference significance. The characteristics of this transaction are: (1) controlling the "shell" in advance through equity participation; (2) effectively avoiding the formation of circular shareholdings through mergers and acquisitions, a relatively rare method; (3) divesting the original business to facilitate Reflect the capital market value and realize the appreciation of shareholders' holdings.
- Sansheng Education acquires 51% stake in Zhongyu Bella
Hanergy Comments: Although the amount involved in this transaction is relatively small, there are many things worth learning from in the transaction arrangement. For example: (1) The target company is in the process of turning from loss to profit. By first acquiring 51% of the holding, rights, which is conducive to both parties reaching an agreement on valuation and other aspects. Moreover, the founder’s shareholding platform still holds shares and can also be used for equity team incentive purposes in the future, which is conducive to achieving a win-win situation; (2) Acquisition in pure cash and requiring founders to increase their holdings of listed company stocks avoids the issuance of shares. The CSRC review process for acquisitions not only binds the interests of buyers and sellers, but also helps control the transaction schedule; (3) further binds the interests of buyers and sellers through performance commitments, excess performance rewards, etc., and targets the recovery of receivables , compliance operations and other transaction-specific matters have been made in more detail; (4) In terms of corporate governance, while reflecting the power of major shareholders, it also gives sufficient space to founders.
- Xinding acquired the controlling stake of Ziguang Holdings
Hanergy Comments: Ziguang Holdings is an important Hong Kong listing platform of Ziguang Group, but Ziguang Holdings’ own performance in recent years cannot be said to be optimistic. From 2016 to 2018, operating income dropped from more than 600 million yuan to less than 100 million yuan, and It was in the red in 2 of the 3 years. In the context of school-enterprise reform, introducing indirect shareholders from all parties behind the new controlling shareholder will help business expansion and cooperation. In addition, through the sorting out of business, board of directors and other aspects, it is expected to have a certain positive impact on the improvement of main business performance.
04 More transactions
html Top domestic hot M&A transactions in September 10
html Top international M&A transactions in September top10
* "China's New Economy M&A Market Monthly Report" is summarized and released by the M&A team of Hanergy Investment Group, aiming to interpret monthly data, summarize the latest developments, and provide cutting-edge information. Insights promote wisdom sharing.