Reporter Daniel Zhang Yi
Edited by Gao Yulei
The low-key TD Bridge mobile phone has once again been pushed to the cusp.
On April 9, New Oriental New Materials (hereinafter referred to as "Oriental Materials") announced that the company intends to acquire 51% of the equity of TD TECH HOLDING LIMITED (hereinafter referred to as "TD TECH") held by Nokia Solutions and Networks GmbH & Co. KG (hereinafter referred to as Nokia) for a transaction consideration of RMB 2,121.6 million.
At present, Nokia holds 51% of all shares in TD TECH, and the remaining 49% is held by Huawei, and if the transaction is finalized, Oriental Materials will become TD TECH's largest shareholder and actually control TD Tech's wholly-owned subsidiary TD Tech.
However, late that night, Huawei urgently issued a statement, saying that Huawei "does not have any intention and may jointly operate TD TECH with Oriental Materials."
Although this announcement is only four sentences, the wording categorically denies the possibility of almost any Oriental Materials as a TD TECH shareholder to form a cooperative relationship with Huawei, and even does not hesitate to say that it will "sell all shares and withdraw", categorically rejecting all possibilities of cooperation with Oriental Materials. The implication is already quite obvious: Huawei does not accept Oriental Materials as a partner of Huawei.
ACCORDING TO TIANYANCHA'S EQUITY INFORMATION, DING KYO IS A WHOLLY-OWNED SUBSIDIARY OF TD TECH HOLDING LIMITED A HONG KONG COMPANY. THE EARLIEST SHAREHOLDERS OF TD TECH HOLDING LIMITED WERE SIEMENS AND HUAWEI. In 2006, Siemens sold all its shares to Nokia, forming the shareholding structure of today's TD Tech.
The history of TD Tech's birth directly determines its inseparable relationship with Huawei, and has also laid the groundwork for TD Tech's later release of the "Huawei Smart Choice" mobile phone.
In 2019, Huawei was included in the US Department of Commerce on the Export Control Entity List, and since then, Huawei's consumer terminal business has been shrinking. As a result, a number of "Huawei Smart Choice" mobile phone brands have gradually been born, including China Mobile's customized NZONE, China Unicom's Youchangxiang, and TCL's Thunderbird, China Post Hi Nova and other brands.
Huawei Smart Select is a relatively lightweight Huawei terminal technology cooperation model: specific to TD Tech's mobile phone business, although TD Mobile phones are not equipped with the Harmony system, these mobile phones released by TD Tech used to use the Android system, but integrated a considerable part of the exclusive functions in the Harmony system in the system, and can also use almost the same design as Huawei's flagship mobile phones to sell in Huawei offline retail stores.
Up to now, TD Techi has released several 5G mobile phones that look like Huawei mobile phones: including the TD M40 that resembles the Mate 40 series, and the TD Tech P50, which directly resembles the Huawei P50 namesake of the Huawei P50.
Today, the M40 mobile phone released by TD Techi has been widely displayed in offline stores in Huawei's offline retail system, side by side with Huawei mobile phones on store display tables. The main design is almost identical to that of Huawei mobile phones, and it can use 5G networks normally.
However, the actual sales of TD Tech's mobile phone have not been widely recognized by traditional Huawei users: TD Tech's M40 only sold more than 100 units in the first 30 days of JD.com's sales, and the actual offline response was not good. According to the manager of a Huawei offline retail store, because TD Tech's mobile phone does not have a significant price difference from Huawei mobile phone in actual price, users who enter the store generally hope to buy Huawei mobile phones printed with Huawei logo at the same price, and are not interested in TD mobile phones, so even in Huawei experience stores in shopping malls with high customer traffic, only 1-2 TD mobile phones can be sold per day.
In addition to offline sales did not play a role in filling the gap in Huawei's market, the complex relationship between TD Tech's mobile phones and Huawei mobile phones was often ambiguously introduced as "Huawei Smart Mobile Phone" during offline shopping guides, so that users who finally wanted to buy Huawei mobile phones, but were finally guided to buy TD Mobile phones, felt that they had bought "pirated Huawei mobile phones". Since 2020, related rights protection news has often appeared on platforms such as black cat complaints and video websites.
PERHAPS IT IS ALSO THE POOR OVERALL SALES OF DINTECH'S MOBILE PHONES, COUPLED WITH THE FACT THAT HUAWEI IS CURRENTLY SUBJECT TO WIDESPREAD SANCTIONS, THAT NOKIA IS SEEKING TO SELL ITS ENTIRE TD TECH STAKE. But from the birth of this idea, to the discussion between Nokia and the potential buyer, Oriental Materials, until the signing of the contract, Huawei as the second largest shareholder was obviously not notified, which led to Huawei's "late-night emergency announcement" on April 9.
As a new entrant in this acquisition, Oriental Materials is an enterprise whose main business is the production of printer ink, not only has never had experience in smartphone manufacturing/design, but as of the end of September 2022, the balance of Oriental Materials' monetary funds is only 170 million RMB.
The acquisition of a 51% stake in TD Tech requires $2.12 billion in cash. Obviously, Oriental Materials itself does not have the cash basis to complete the acquisition. Almost all acquisition funds need to be raised externally. The share issuance plan released by Oriental Materials also mentioned that it is expected to raise "no more than 2 billion yuan" for this acquisition. It is a typical "snake-swallowing" acquisition.
Whether from the perspective of the company's main business or capital strength, Oriental Materials does not have the realistic conditions to acquire TD Tech, so the actual purpose of Oriental Materials' acquisition - with the help of this acquisition, the actual purpose of building itself into a "Huawei concept stock" in one fell swoop has never been a secret. Huawei also sees the actual purpose of oriental materials. Therefore, he "shot" in advance to try to prevent the completion of this transaction. The "late-night announcement" is also to further stop the abnormal fluctuation of the stock price of listed companies caused by this.
At present, even if Oriental Materials said in its reply to the media that it is "trying everything to negotiate with Huawei", it can be seen from the announcement given by Huawei on the evening of the 9th that Huawei has almost no room for concessions and tolerance in the capital market rubbing hot spots. Therefore, the current acquisition will have the following three development results:
HUAWEI FULLY ACQUIRES TD TECH
THE ACQUISITION OF ORIENTAL MATERIALS WAS COMPLETED, AND HUAWEI SOLD ALL TD TECH SHARES
The acquisition was suspended and Nokia continued to look for other suitable acquirers
The first was Huawei's exercise of its pre-emptive right to acquire a 51% stake sold by Nokia, making TD Tech a wholly owned subsidiary of Huawei. But this is not a suitable choice for Huawei: the reason why TD Tech can currently release/sell 5G mobile phones without sanctions/entity list restrictions is largely because its largest shareholder is Siemens/Nokia, not Huawei. But for Huawei, a wholly-owned subsidiary that can no longer normally release/sell 5G mobile phones is of no practical significance. Huawei's announcement mentions that "we expect shareholders with strategic value to jointly support TD TECH's continued development" indicates another important purpose of TD Tech's Huawei: to strengthen the cooperative relationship with Huawei and Nokia through joint ventures.
In addition to circumventing sanctions, Nokia, as a mobile communications field today, has become the second largest 5G patent owner after Huawei with 1471 patents in the ranking of 5G standard-essential patent claims.
But now Nokia wants to "get off", eager to try to take over Oriental Materials does not have the matching technical strength in the field of mobile communications, if Huawei finally chooses to "get off", TD Tech mobile phones can no longer appear in Huawei's offline retail stores, but also completely lose all technical/hardware resource support from Huawei - which is undoubtedly a devastating blow to the current slow development of TD Tech's mobile phone business.
If Nokia eventually sells its entire stake to Oriental Materials, making it TD Tech's de facto largest shareholder, Huawei is more likely to take the last option mentioned in the statement - selling all of TD Tech's shares and terminating various technology licenses to TD Tech.
Therefore, in fact, the most likely outcome is that Oriental Materials terminates the acquisition of shares: but according to the current announcement information, Nokia has clarified the acquisition suspension clause in the acquisition with Oriental Materials, which mentions that "if the acquisition fails, Oriental Materials needs to pay a termination fee of 29 million yuan to 84.864 million yuan (to Nokia)". This is also a major blow to Oriental Materials, which has only 170 million yuan in cash on the account.
BUT EITHER WAY, FROM THE TIME NOKIA PLANS TO SELL ALL OF ITS TD TECH SHARES, IT IS ALREADY DOOMED TO A GLOOMY FUTURE DEVELOPMENT PROSPECT.
Huawei wants partners with "the same strategic capabilities", not simple acquirers, and the particularity of Huawei's own position in the industry has determined that TD Techway has become a "hot potato" that "can't catch what you want to take, and don't want to take what you can catch".