The main securities firm in the country has officially moved to the regulatory approval phase for its acquisition of two mid-sized competitors, Dongxing Securities and Cinda Securities. The Shanghai Stock Exchange has accepted a deal proposed by the firm to swap shares in order to acquire and integrate these two companies, according to a statement issued yesterday.
Back in November, the firm announced it had entered into a preliminary agreement to merge with Dongxing and Cinda through a share swap, with the goal of creating a financial entity valued at just over 1 trillion CNY (around 147.9 billion USD) in assets. Approximately a month later, the company revealed detailed plans for the share exchange process.
Late last month, it disclosed another draft plan, which involved issuing more than 3.1 billion shares on the mainland at a price of roughly 36.68 CNY (about 5.42 USD) per share. The exchange rates indicated that Dongxing’s shares would be swapped at 16.05 CNY and Cinda’s at 19.11 CNY, with swap ratios of approximately 0.438 and 0.521, respectively.
All three firms are controlled by a state-owned investment company. As of the end of last year, this investor held a 40 percent stake directly in the main company and owned 45 percent of Dongxing and 79 percent of Cinda through indirect holdings.
Once finalized, the merged entity will assume all assets, liabilities, businesses, employees, contracts, licenses, and other rights and obligations of Dongxing and Cinda, the main company stated.
Last year, the main securities firm reported operating revenues of around 28.5 billion CNY (approximately 4.2 billion USD) and a net profit of 9.8 billion CNY (about 1.4 billion USD), showing increases of 34 percent and 72 percent from the previous year. For their parts, Dongxing and Cinda reported revenues of 4.7 billion and 4 billion CNY, and net profits of 2.1 billion and 1.9 billion CNY, respectively.
As of December 31, the main firm managed assets totaling approximately 782.8 billion CNY (around 115.8 billion USD), while Dongxing and Cinda held 114.2 billion and 130 billion CNY, respectively, bringing their combined total to just over 1 trillion CNY.
The share prices of the main securities company increased by 0.7 percent to 33.93 CNY in Shanghai but decreased slightly by 0.4 percent to HKD20.72 (roughly 2.64 USD) in Hong Kong as of early trading hours today. Dongxing and Cinda’s stocks moved modestly, up by 0.5 percent to 12.93 CNY and by 0.1 percent to 15.48 CNY, respectively.