China M&A Market Heats Up with "Industry + Technology"
The A-share market is entering a new round of merger and acquisition (M&A) and restructuring cycles. Since the introduction of the new "Nine National Measures," a series of policies regarding the M&A and restructuring market have been rolled out, continuously optimizing the policy environment, and the number of related cases has significantly increased compared to the same period last year. Looking at specific cases, industry chain integration has become an important "main line" in this year's M&A market, with significant cases such as "hard technology" company mergers and acquisitions, central and state-owned enterprise (SOE) professional integration, and securities firm M&A and restructuring frequently emerging.
Industry insiders have indicated that with the release of policy dividends, the optimization of market ecology, and the improvement of the macro environment, the M&A tide in the A-share market may continue, further promoting enterprises to leverage synergistic effects and aiding in the transformation and upgrading of the economy.
The M&A and restructuring market remains active
This year, the M&A and restructuring market has continued to be active, with significant merger cases emerging. Data shows that since May 2024, A-share listed companies have disclosed 46 major asset restructuring projects, and 7 share issuance type restructurings have been submitted to the China Securities Regulatory Commission (CSRC) for registration. Looking at the types of companies involved in mergers, the three most active categories are "hard technology" company mergers and acquisitions, central and state-owned enterprise integration, and securities industry mergers and acquisitions, which have helped to promote technological innovation and resource integration.
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In the technology sector, on August 5th, the registration of AVIC Electronic Measurement Technology Co., Ltd.'s 17.4 billion yuan acquisition of 100% equity of AVIC Chengdu Aircraft Industrial Group became effective, setting a new record for the transaction amount and scale of M&A and restructuring projects since the pilot registration system was implemented in the Shenzhen market. In July, Puyuan Precision Electronics' share issuance to purchase 67.74% equity of Naishu Electronics was approved for registration by the CSRC, becoming the first M&A and restructuring registration case after the "Science and Technology Innovation Board Eight Measures." The company's technical barriers have been further strengthened, and its system integration capabilities have been enhanced.
At the same time, central and state-owned enterprises continue to promote professional integration to further enhance industrial synergistic effects.
On September 19th, China Shipbuilding and China Shipbuilding Heavy Industry Corporation Limited welcomed the resumption of trading of their stocks. Previously, the two companies announced that China Shipbuilding plans to merge with China Shipbuilding Heavy Industry by issuing A-shares in a share exchange, with China Shipbuilding as the absorbing party and China Shipbuilding Heavy Industry as the absorbed party. After the completion of the share exchange merger, China Shipbuilding Heavy Industry will terminate its listing and cancel its legal person status, and China Shipbuilding will inherit and take over all assets, liabilities, businesses, personnel, contracts, and all other rights and obligations of China Shipbuilding Heavy Industry.
On September 8th, Qinghai Salt Lake Co., Ltd. announced that the actual controller of the company, Qinghai Provincial Government State-owned Assets Supervision and Administration Commission, the controlling shareholder Qinghai State Investment, and China Minmetals and its subsidiary enterprises signed a cooperation agreement. The Qinghai Provincial Government State-owned Assets Supervision and Administration Commission, Qinghai State Investment, and China Minmetals plan to jointly establish China Salt Lake Industry Group Co., Ltd. This also implies that a "carrier" in the salt lake field may be on the horizon.
The integration "wave" in the securities industry is also surging. Recently, the first major securities firm merger case since the implementation of the new "Nine National Measures" has emerged—Guotai Junan Securities plans to merge with Haitong Securities through a share exchange. According to incomplete statistics by reporters, the number of M&A and restructuring cases in the securities industry this year has reached 7, including "Guolian + Minsheng," "Guoxin + Wanhe," "Zheshang + Guodu," and others have all made new progress.
"Overall, this year's M&A and restructuring in the A-share market are characterized by active technology mergers and acquisitions, central and state-owned enterprise integration synergy, and active securities firm restructuring, with the highlight being the acceleration of marketization," said Tian Lihui, Dean of the Institute of Financial Development at Nankai University, to a reporter from the Economic Reference News. "Active 'hard technology' company mergers and acquisitions help promote technological innovation and industrial upgrading; central and state-owned enterprise integration is a key measure to deepen the reform of state-owned capital and enterprises, aiming to optimize resource allocation and enhance enterprise competitiveness and market influence. Policy support makes M&A and restructuring more market-oriented, relying more on market forces to complete resource allocation, with a significant reduction in administrative intervention."Industry Chain Integration Trend Becomes Prominent
From the disclosed merger and acquisition (M&A) cases this year, industry chain integration has become an important "main line" for many listed companies' mergers and reorganizations. In the view of industry insiders, the integration of the industry chain has effectively promoted enterprises to connect the upstream and downstream of the industry, optimize the level of industry chain integration, fully exert synergistic effects, and promote the transformation and upgrading of the economy.
"The M&A in the technology industry has been active this year. Taking the acquisition of Cheng Fei Group by AVIC Electronic Measurement Technology as an example, this acquisition is expected to enable the company to further enter the research and production of aviation weapons and equipment, as well as the civil aircraft parts field, bringing about deep integration and complementarity of technology, market, and resources, and has had a significant effect on resource integration and the development of new quality productive forces," said Chen Long, Chief Economist and Director of the Research Institute at Chuan Cai Securities, to a reporter from the Economic Reference News.
In the pharmaceutical field, Qianjin Pharmaceutical recently announced that it plans to purchase 28.92% of the shares of Qianjin Xiangjiang Pharmaceutical and 68% of the shares of Qianjin Xieli Pharmaceutical by issuing shares. The two companies acquired this time are important components of Qianjin Pharmaceutical's Western medicine segment. Qianjin Pharmaceutical believes that the acquisition will further improve the level of synergy and increase the company's net profit. China Resources Sanjiu announced in early August that it plans to spend 6.2 billion yuan to acquire Tian Shi Li shares and become its new controlling shareholder to exert the synergistic effect of the industry chain and enhance the core competitiveness of the entire industry chain. China Resources Sanjiu stated that the company actively pays attention to the opportunities for high-quality industry resource integration and the direction of mergers and acquisitions closely revolves around the company's strategic direction.
In the energy field, Yongtai Energy announced that the company plans to issue shares to Xinyi Group and purchase about 51% of the shares of Tianyue Coal Industry held by it, further consolidating the development foundation of the main coal and electricity business. Gansu Energy also announced that the company plans to purchase 66% of the shares of Gansu Electric Power Changle Power Generation through the issuance of shares and cash payment, with a valuation of 7.628 billion yuan, and raise no more than 1.9 billion yuan.
"At present, the internal and external environment of our country has changed, and the driving force for mergers and acquisitions is quietly gathering, gradually entering the era of systematic transactions for industry integration," said the Zero2IPO Research Center in its latest report. On the economic level, China's economy has entered a stage of high-quality development, some industries have entered the mature stage, the competition for stock has intensified, and the demand for industry integration has increased. On the capital market level, the IPO has been tightened in stages, and the valuation of the secondary market has rebounded, and more and more enterprises and investors have begun to consider the feasibility of mergers and acquisitions. On the enterprise level, the leading enterprises have grown and have the strength and foundation for mergers and acquisitions, and have started to lay out globally, gradually stepping onto the international stage.
The policy effect continues to strengthen
The activity of the merger and reorganization market is inseparable from the continuous efforts of relevant supporting policies. In February this year, when the China Securities Regulatory Commission (CSRC) held a symposium to support the mergers and reorganizations of listed companies, it stated that it would scientifically coordinate the relationship between promoting development and strengthening supervision and preventing risks, take multiple measures to activate the merger and reorganization market, and support excellent typical cases to land and take effect. The subsequently introduced new "Nine National Articles" and "Eight Articles of the Science and Technology Innovation Board" once again made it clear that they strongly support mergers and reorganizations.
Specifically, it includes increasing the tolerance of reorganization valuation, supporting the autonomy of the two parties in the third-party reorganization transaction to negotiate whether to agree on performance commitments, supporting the absorption and merger between listed companies, issuing targeted convertible bond reorganization rules, improving the "small amount and fast" reorganization mechanism, extending the validity period of financial materials for share issuance reorganization, establishing and perfecting the "green channel" for mergers and reorganizations of "hard technology" enterprises that carry out key core technology research, supporting the acquisition of high-quality unprofitable "hard technology" enterprises by listed companies on the Science and Technology Innovation Board, supporting the merger and reorganization of upstream and downstream industry chains by listed companies on the Science and Technology Innovation Board, encouraging listed companies to improve quality and efficiency, and strengthen the quality of listed companies through mergers and reorganizations.
"The relevant policies have significantly stimulated the vitality of the merger and reorganization market," said Tian Lihui. Since the introduction of the new "Nine National Articles," measures such as increasing the tolerance of reorganization valuation, supporting the absorption and merger between listed companies, and issuing targeted convertible bond reorganization rules have injected new vitality into the merger and reorganization market. On the one hand, policy support has improved the efficiency and success rate of mergers and reorganizations and reduced the cost of corporate mergers and acquisitions; on the other hand, the guiding nature of the policy has also promoted the flow of resources to more promising enterprises, which is conducive to the survival of the fittest in the entire market and the improvement of the overall quality and efficiency of the capital market.Looking ahead, with the release of policy dividends, the optimization of the market ecosystem, and the improvement of the macro environment, M&A and restructuring in the A-share market are expected to remain active.
"As industries mature, the macro environment changes, and the capabilities of PE/VC institutions strengthen, the golden age of systematic M&A transactions in our country has already begun, marking a shift from exploring scattered opportunities to in-depth strategic integration," said the Zero2IPO Research Center.
In Chen Lu's view, with the continuous release of policy dividends, the A-share M&A market is expected to remain active, especially in the technology sector and state-owned enterprise (SOE) mergers and acquisitions, and industrial integration, which will help promote the upgrading of the economic structure. The role of the financial industry in serving the real economy will also become more apparent in this process.
Tian Lihui also expects that the trend of M&A and restructuring is expected to become a trend in the future, especially in the reform of central and state-owned enterprises, technological innovation, and the integration of the financial services industry. M&A and restructuring will continue to be an important means to promote industrial upgrading and enhance market competitiveness.