Nearly 140 A-share listed companies have launched major restructuring plans this year
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Since the beginning of this year, the activity of mergers and acquisitions and reorganizations of listed companies in the A-share market has increased significantly. According to Wind data, as of press time on May 31, a total of nearly 140 companies have launched major restructuring plans this year, an increase of 223% over the same period last year.
Experts in the industry said that the active merger and reorganization market this year is the result of my country’s registration system reform and regulatory optimization, and it is also a manifestation of the gradual recovery of my country’s economy. With the continuous implementation of the comprehensive registration system, the M&A market will show new vitality and its activity will continue to increase.
Mergers and acquisitions doubled year-on-year
On the evening of May 30, Homa Electric disclosed a reminder announcement about planning a major asset reorganization. The announcement shows that the company intends to purchase 100% of the shares of Hefei Home Appliances, a wholly-owned subsidiary of TCL Industries, in cash.
Since the beginning of this year, the number of cases such as Omar Electric has grown rapidly, and the activity of mergers and acquisitions of A-share listed companies has increased significantly. According to Wind data, as of the press release on May 31, a total of 139 A-share companies disclosed a total of 146 major restructuring events this year, with a total transaction value of 463.21 billion yuan. In the same period last year, only 43 companies disclosed 51 major restructuring events, with a total transaction value of 113.907 billion yuan. Based on this calculation, the number of listed companies disclosing major restructuring events this year has increased by 223.26% year-on-year, and the total transaction value has increased by 306.66% year-on-year.
From the perspective of specific industries, listed companies that disclose mergers and acquisitions and reorganizations are mainly concentrated in industries such as machinery, chemicals, electronics, construction materials, and electrical equipment, and most of the transaction targets also belong to the above-mentioned industries. The cases of “A to A” continue to increase, all based on the logic of industrial collaboration, flexible use of transaction methods such as agreement acquisition, tender offer, subscription and fixed increase, etc., to carry out mergers and acquisitions in the same industry or upstream and downstream.
From the perspective of the participants in mergers and acquisitions, the mergers and acquisitions of state-owned listed companies this year are particularly active, and the transaction value is not cheap. Among the 12 major restructuring events with a total transaction value of more than 10 billion yuan disclosed this year, 11 of the event participants were state-owned listed companies. Among them, the acquisition of 100% equity of Yunchuan Company by Changjiang Electric Power Co., Ltd., with a total transaction value of 80.484 billion yuan, ranked first.
Situation improves, reform benefits appear
Regulatory authorities continue to increase their support for mergers and acquisitions. On December 9, 2022, the Shanghai Stock Exchange, Shenzhen Stock Exchange, and Beijing Stock Exchange publicly solicited opinions on the management measures (draft for comments) of the Listing Review Committee and the M&A Reorganization Review Committee of the exchanges, and made corresponding adjustments to the supporting systems and operating mechanisms of the Listing Committee and the Reorganization Committee. Adjust and optimize. On February 17 this year, the China Securities Regulatory Commission and the stock exchange issued the rules for the full implementation of the stock issuance registration system, and improving the major asset restructuring system of listed companies is one of the main contents.
With the continuous improvement of the system, the review efficiency of mergers and acquisitions has also been further improved. For example, on March 1, the issue of shares issued by Luxi Chemical to purchase assets was accepted by the M&A Committee of the Shenzhen Stock Exchange; on March 29, the company’s merger and reorganization was approved; Merged Luxi Group. In just one and a half months, the merger and reorganization of Luxi Chemical has come to an end.
“Since the beginning of this year, the activity of mergers and acquisitions in the A-share market has increased significantly. This is a reflection of the shift in expectations of Chinese entrepreneurs, the low capital market and the gradual recovery of the economy. It is also the result of my country’s registration system reform and regulatory optimization.” Vice President of Guangxi University, Tian Lihui, dean of the Financial Development Research Institute of Nankai University, told the reporter of Economic Information Daily.
Tian Lihui said that in the context of the improvement of the epidemic situation and the strengthening of policies, the economic expectations of some entrepreneurs in my country have gradually increased. When the securities market enters the bottom area, the stock price of some enterprises may be lower than the intrinsic value. A recovery in the economy tends to lead to a rise in the stock market. This period is the golden age of mergers and acquisitions, and there will be a large number of mergers and acquisitions and active restructuring activities. The reform of the registration system in my country not only brings about the loss of the value of the A-share shell and the restoration of the valuation of “poor enterprises”, but also promotes the marketization and facilitation of mergers and acquisitions. Therefore, this year, not only mergers and acquisitions are active, but also mergers and acquisitions between listed companies are gradually increasing, and mergers and acquisitions involving state-owned enterprises are particularly prominent.
Chen Li, chief economist and director of the research institute of Chuancai Securities, said that there are three reasons for the active mergers and acquisitions of listed companies: the market level, with the advancement and deepening of capital market reforms, the standardization and transparency of the market have been significantly improved, This has increased the number of mergers and acquisitions of enterprises; at the corporate level, the successive introduction of reform policies has boosted the high-quality development of the company, and a large number of listed companies have improved their market competitiveness through mergers and acquisitions; at the environmental level, affected by fluctuations in the economic recovery process, corporate Operating pressure is high, and some companies use sufficient mergers and acquisitions as a coping strategy to improve operating efficiency by integrating upstream and downstream industrial chains.
“my country is in a critical period when economic fundamentals are recovering and economic endogenous power supports growth. The merger and reorganization of state-owned enterprises will promote the optimization of state-owned capital, which is of great significance to serving the country’s strategic development goals and achieving high-quality development. For enterprises He said that mergers and acquisitions will also help state-owned enterprises revitalize their stocks and accelerate transformation, thereby improving market competitiveness and operating efficiency.” Chen Li said that this is the main reason for the outstanding performance of state-owned listed companies in mergers and acquisitions.
Enterprises have vitality, market vitality
Industry experts said that as one of the important ways to promote transformation and upgrading and achieve high-quality development, mergers and acquisitions are of great significance to listed companies. Under the comprehensive registration system, the M&A and reorganization system will continue to improve, and the M&A and reorganization market will show new vitality and activity will continue to increase.
Tian Lihui analyzed that with the advancement of the comprehensive registration system, mergers and acquisitions will become more market-oriented and convenient. Marketization means that more companies will achieve leapfrog development through mergers and acquisitions under the background of relatively low stock market valuations and relatively clear economic recovery momentum. Facilitation means that enterprises can carry out mergers and acquisitions faster and more efficiently. Therefore, after the launch of the comprehensive registration system reform, my country’s mergers and acquisitions will become more active.
Chen Li also believes that the number of mergers and acquisitions in the future is expected to continue to increase, the scale is expected to expand, and the supervision is expected to be more standardized. With the increasing activity of mergers and acquisitions, the industry concentration will further increase, and the industries supported by the state are expected to become areas with extremely high activity of mergers and acquisitions.
But at the same time, new challenges have also emerged for the regulators. Tian Lihui said that the capital market is an important channel for mergers and acquisitions. It is necessary to promote the reform of the review and registration system for mergers and acquisitions, the simplification and optimization of mergers and acquisitions procedures, and the promotion of market mergers and acquisitions with synergistic effects on the premise of protecting the interests of investors.
“For the regulators, first, it is necessary to severely crack down on illegal profit-making in the name of mergers and acquisitions, and strictly prevent mergers and acquisitions from purchasing companies that do not meet the standards at a premium. Second, it is necessary to strengthen the supervision of insider information and non-compliance behaviors to ensure that Information is open and transparent,” Chen Li said.
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