Since 2021, there have been at least 13 a-eat-a cases in the A-share market, exceeding 8 in 2020 and 11 in 2019, reaching a new high in recent years.
With the continuous promotion of the registration system, the “seesaw” effect of IPO and M & A is still significant.
According to wind data, since 2021, as of December 29 (the same below), 152 major restructuring plans have been released in the A-share market, including 98 plans to disclose the transaction value, with a total transaction value of 331.148 billion yuan. There were only 104 major restructuring orders initiated by A-share listed companies as “competitive buyers”, of which 56 disclosed the transaction value, with a total transaction value of 205.199 billion yuan.
According to the previous statistics of 21 Capital Federal Reserve M & A Research Center, in 2018, 2019 and 2020, the major asset acquisitions initiated by A-share listed companies were 192, 151 and 117 respectively, with a total transaction amount of 740.64 billion yuan, 634.59 billion yuan and 188.16 billion yuan (only the cases in which the transaction price has been disclosed in the current year are counted).
from the disclosure singular, the M & A cases of listed companies as competitive buyers have decreased for six consecutive years in 2021, but the total disclosed transaction amount has increased compared with 2020.
In terms of the completion of restructuring, among the major restructuring events completed with listed companies as competing buyers, 58 have been successfully completed in 2021 (as of December 29), with a total transaction value of RMB 251.246 billion. Most of these plans were released before 2021, and only 19 were released and completed in 2021.
On the whole, the major restructuring market has continued the gradual downturn since 2016, which is related to the increasing lack of high-quality assets supply side under the registration system, regulatory policies guiding the M & a market to become more rational and other factors.
However, on the other side of the “cold” transaction, the M & a market, as previously predicted by the 21 Capital Federal Reserve M & A Research Center, tends to be rational, the era of arbitrage ends, and industrial M & A has gradually become a trend. In the major restructuring of listed companies completed in 2021, 35 PE target companies were disclosed, of which 24 PE target companies were less than 30 times, accounting for nearly 70%.
At the same time, “a eats a” is gradually rising. according to the incomplete statistics of the 21st Century Business Herald reporter, there have been at least 13 A-share eating a cases in the A-share market since 2021, exceeding 8 in 2020 and 11 in 2019, reaching a new high in recent years.
ten billion transactions only 8
After experiencing the peak of M & A in 2015 and 2016, the M & a market has gradually cooled down, and the restructuring market in 2021 continues this “cold wave”.
Under the overall cooling environment, heavy M & A transactions with a transaction amount of more than 10 billion yuan also decreased significantly. According to statistics, there were 8 “10 billion” restructuring plans disclosed in the market in 2021, and only one has completed asset transfer so far, that is, Tangshan Jidong Cement Co.Ltd(000401) issued shares to Bbmg Corporation(601992) non-public to acquire 47.09% equity of Jinyu Tangshan Jidong Cement Co.Ltd(000401) (Tangshan) Co., Ltd.
However, along with the “cold wave”, the M & a market has become more and more rational. Although the overall transaction situation is poor, under the influence of regulatory policy guidance, high premium transactions and enterprises limited by capital chain, M & A of listed companies is no longer blind as in the past, but centered on the industrial logic of listed companies, and industrial M & A has become the mainstream trend, Cross border mergers and acquisitions are gradually declining.
According to the data of wind, among the 104 major reorganizations mentioned above, the purpose of reorganization is more inclined to strategic cooperation and industry integration. Among them, there are 40 reorganizations for the purpose of strategic cooperation, 12 for horizontal integration and 1 for vertical integration, accounting for more than half of the total. M & A based on diversification strategy mostly contains the logic of industrial development.
For example, Xcmg Construction Machinery Co.Ltd(000425) absorbs and merges 100% equity of XCMG Co., Ltd. although there is a gap in the subdivided field, they both belong to the large field of basic construction machinery; Jiangsu Eastern Shenghong Co.Ltd(000301) dingzeng’s acquisition of silbang is also improving the industrial layout. The company’s main business will further expand and increase the value-added olefin derivatives, all of which belong to the chemical field; Similarly, Yunnan Baiyao Group Co.Ltd(000538) subscription Shanghai Pharmaceuticals Holding Co.Ltd(601607) , Snowsky Salt Industry Group Co.Ltd(600929) fixed increase acquisition of Hunan Chongqing Yanhua is the same logic.
It is worth mentioning that fell into “Silence” with “cross-border M & a”, as well as the backdoor market. The backdoor market on the gem has not “broken the ice” two years after the policy was relaxed. Backdoor is becoming more and more rare under the tide of the registration system.
Wind data shows that among the major restructuring cases disclosed since 2021, only 9 mergers and acquisitions for the purpose of “backdoor listing”, of which 4 have failed. The remaining backdoor Zhongyi of Wengfu group has just been approved by the general meeting of shareholders, which is an example of rapid progress; Innovative metal backdoor listing Beijing Hualian Hypermarket Co.Ltd(600361) , Sanmenxia aluminum backdoor Fuda Alloy Material Co.Ltd(603045) , yipuli backdoor Hunan Nanling Industry Explosive Material Co.Ltd(002096) , and Beiqing wisdom backdoor Sec Electric Machinery Co.Ltd(603988) are all in the stage of the board’s plan.
Most of these enterprises belong to more traditional fields, with relatively low valuation, and the backdoor objects are listed companies on the main board. Before backdoor, innovative metal had failed to impact the capital market twice.
For most enterprises, backdoor listing is not the best way under the background of the opening of the registration system of the science and innovation board and the gem, and the official opening trading of the Beijing stock exchange. The audit standard of backdoor listing is similar to that of IPO, but under the dividend of new shares, the valuation of M & a market is inferior to that of IPO enterprises.
It is worth mentioning that since September 2021, the A-share market has gradually experienced frequent breaking of new shares, and the market valuation and liquidity of small cap stocks and underperforming stocks have become increasingly shrinking.
According to the capital fed M & A Research Center, with the steady progress of the registration system and the general decline of asset quality, the valuation of IPO will accelerate to return to a reasonable range, and the gap with the valuation of M & A will gradually narrow. When there is a large-scale break on the first day of IPO in 2021, the valuation advantage of IPO will no longer be significantly ahead of M & A, the mentality of enterprise bosses will also change, and new opportunities for M & A will come.
were the six mergers and acquisitions in the year
Although the efficiency of M & A review under the registration system under the science and innovation board and the gem has been significantly improved, and the new regulations on M & A have also lifted many unnecessary restrictions, the success rate of M & a market in 2021 is not high.
2 since 021, gem has accepted a total of 14 mergers and acquisitions of enterprises, but at present, only 3 have been registered and effective ( Chengdu Information Technology Of Chinese Academy Of Sciences Co.Ltd(300678) , Hunan Huakai Cultural And Creative Co.Ltd(300592) and stone new materials), 7 have been voluntarily withdrawn, 1 has been inquired, 1 has replied, 1 has been newly accepted and 1 has been approved by the M & a committee.
Due to the late opening of the board and most of them are growth enterprises, the demand for M & A of most enterprises is not strong, and so far only three orders have been accepted. Since the successful completion of Suzhou Hyc Technology Co.Ltd(688001) M & A and reorganization, no enterprise has completed the reorganization in 2021. The case of Nanjing Wondux Environmental Protection Technology Corp.Ltd(688178) acquisition of Taoyuan in the era accepted in May this year was finally stalled due to changes in the market environment and the actual situation of the company (the trend of increasing revenue without increasing profit in 2021 was obvious).
Looking at the whole market, the M & A of A-share enterprises as competitive buyers in 2021 is not optimistic either in terms of overall quantity or success rate.
Wind data show that 29 of the 104 major restructuring events disclosed in 2021 have failed, accounting for 27.88%. The pass rate of M & A review is slightly better than that in 2020, but the overall number of enterprises is almost halved.
According to statistics, since 2021, a total of 45 enterprises have been reviewed at the M & a meeting, compared with 87 in 2020 and more than 100 from 2017 to 2019. Even at such a low number of meetings, there are still six mergers and acquisitions, with a pass rate of 86.67%, slightly higher than 82.76% in 2020.
The 21st Century Business Herald reporter sorted out the six cases and found that the reasons for the rejection were still “old problems”, that is, the pricing of the underlying assets, the sustainability of the underlying assets and goodwill.
For example, Letong Chemical Co.Ltd(002319) the acquisition of nuclear Sanli was questioned by the CSRC that “the fairness of the underlying asset pricing was not fully disclosed, and it was not fully explained that this transaction was conducive to improving the asset quality and enhancing the sustainable profitability of the listed company”; Shenzhen Success Electronics Co.Ltd(002289) the acquisition of Qianhai Shouke was questioned that “the core competitiveness of the underlying assets is in doubt, and the goodwill accounts for a large proportion after the completion of the transaction, which is not conducive to improving the quality of listed companies”;
Beijing Aosaikang Pharmaceutical Co.Ltd(002755) 6 times premium acquisition of weidekang medical was questioned that “it failed to fully disclose the impact of domestic and foreign industrial policy changes on the underlying assets, and there is great uncertainty in the future profitability”; Jiangsu Shagang Co.Ltd(002075) cross border acquisition of global switch “failed to fully disclose the overseas policy risks and core competitiveness of the underlying assets, and there is great uncertainty in profitability”; Beijing Jingcheng Machinery Electric Company Limited(600860) the high premium cross-border acquisition of Beiyang Tianqing was questioned as “the continued profitability of the underlying assets and the rationality of the performance forecast were not fully disclosed”.
In addition, in the case of Ruitai Materials Technology Co.Ltd(002066) acquisition of Wuhan refractory and Ruitai Magang, in addition to being questioned whether it can “enhance the independence and sustainable profitability of listed companies”, the CSRC also pointed out that its “failure to fully disclose this transaction is conducive to reducing related party transactions and avoiding horizontal competition”.
According to the original plan, Ruitai Materials Technology Co.Ltd(002066) plans to purchase 100% equity of Wuhan refractory held by WISCO group and the remaining 40% equity of Ruitai Masteel held by Masteel group by issuing shares. At the same time, the company will also issue shares to WISCO group and Masteel group to raise supporting funds. The controlling shareholders of the latter two are China Baowu, Meanwhile, the current shareholders of Ruitai Materials Technology Co.Ltd(002066) will also transfer some shares to China Baowu. After the transaction is completed, China Baowu will become the actual controller of Ruitai Materials Technology Co.Ltd(002066) .
However, during the reporting period, the income of Wuhan refractory fell during the above-mentioned period, and the profit turned into loss and loss continued to expand. In this transaction, the counterparty only made performance commitment for Ruitai Maanshan Iron and steel, while Wuhan refractory has no performance commitment.
It is understood that Wuhan refractory and Ruitai Maanshan Iron and Steel Co., Ltd. are steel supporting enterprises of WISCO group and Maanshan Iron and steel group respectively. Due to historical reasons, the two sides have established a long-term and stable cooperative relationship, and the proportion of related party transactions is relatively high. And the company said that after the completion of this transaction, it is expected that such related party transactions will continue to occur. But from the final result, this view clearly did not convince the regulators.
a eat a case to a new high
In 2021, the registration system continued to advance, and the 28 differentiation pattern of the A-share market intensified.
As of December 29, the number of listed companies with a market value of less than 3 billion yuan was as high as 911, accounting for 19.46%, and the number of listed companies with a market value of less than 5 billion yuan was as high as 1933, accounting for more than 41.29%. In addition, affected by covid-19 epidemic, macroeconomic downturn, industry integration and other factors, M & A integration among A-share enterprises gradually rose and reached a new high in 2011.
According to the incomplete statistics of the 21st Century Business Herald reporter, there were at least 13 cases of a eating a in 2021, a new high in recent years. among them, there are 6 absorption and merger cases among listed companies only, including City Development Environment Co.Ltd(000885) share exchange absorption and merger Tus Environmental Science And Technology Development Co.Ltd(000826) , Wangfujing Group Co.Ltd(600859) share exchange absorption and merger of shoushang shares, Caissa Tosun Development Co.Ltd(000796) absorption and merger Utour Group Co.Ltd(002707) (failure), Longyuan Power Conversion and merger * Inner Mongolia Pingzhuang Energy Resources Co.Ltd(000780) , Winning Health Technology Group Co.Ltd(300253) absorption and merger B-Soft Co.Ltd(300451) (failure), and China Energy Engineering Corporation Limited(601868) absorption and merger of Gezhouba.
In addition, Bbmg Corporation(601992) acquired Shede Spirits Co.Ltd(600702) 29.95% equity, Zhuhai Port Co.Ltd(000507) acquired Jiangsu Xiuqiang Glasswork Co.Ltd(300160) 25.01% equity, Nanjing Iron & Steel Co.Ltd(600282) acquired Zhejiang Wansheng Co.Ltd(603010) 14.42% equity, Midea Group Co.Ltd(000333) acquired 29.09% equity of Wandong pharmaceutical, and Longi Green Energy Technology Co.Ltd(601012) acquired Center International Group Co.Ltd(603098) 27.25% equity by participating in fixed growth holding Tangshan Jidong Cement Co.Ltd(000401) , Gree Electric Appliances Inc.Of Zhuhai(000651) planned to control Zhejiang Dun’An Artificial Environment Co.Ltd(002011) .
In 2018-2020, there were 3, 11 and 8 newly disclosed “a eats a” cases respectively.
Earlier, the 21 capital – Federal Reserve M & A Research Center predicted that “a eats a” will become more and more frequent.
21 the capital fed M & A Research Center believes that under the change of M & a concept and motivation of listed companies, the effects and highlights brought by M & A are completely different from the upsurge in 2013-2016. It can be said that 2021 will be the beginning of the era of A-share M & a 2.0. After A-Shares enter the era of M & a 2.0, the number of cross-border M & A will continue to shrink, industrial M & A will become the mainstream of the M & a market, and industry leading enterprises with high M & A integration ability, especially those with high share price rise in recent years and core competitiveness, will become the preferred beneficiaries after the rebound of the new round of M & a market, and will truly realize the effect of “1 + 1 > 2” M & A integration, “A eat a” phenomenon will occur frequently.
(21st Century Business Herald)
