Source of this article: Times Finance Author: Wu Yu
The express delivery circle set off another sensational merger and acquisition case.
On May 12, Fengwang Holdings, a subsidiary of SF Holding, signed the "Equity Transfer Agreement" with Shenzhen Jitu Supply Chain Co., Ltd., and Fengwang Holdings intends to transfer 100% of the equity of Shenzhen Fengwang Information Technology Co., Ltd. for 1.183 billion yuan. The target company holds 100% of the equity of Fengwang Express, and Fengwang Express is the economic express business operator of the franchise model.
In recent years, the express logistics industry has been acquired one after another, and mergers and integrations have become the norm under profound changes and adjustments. The protagonist of this transaction is the industry leader SF on one side, and the fast-rising Jitu Express on the other hand.
For J&T, the inclusion of Fengwang will further complement the network of local business and consolidate J&T's advantages in the field of e-commerce express delivery; Especially this year, J&T has been rumored to plan to go public in Hong Kong, so this move is also considered to be the "last attempt" before J&T's listing.
For SF, unloading the burden and focusing on the main business of direct operation is a correct decision made in a timely manner based on the changing market environment. Zheshang Securities pointed out that as a leader in express logistics, SF's profit recovery in timeliness business, the increase in profits of large-scale express delivery business and the continuous improvement pace of new business are expected to exceed expectations, which will open up medium and long-term value space and maintain a "buy" rating. The seemingly surprising meeting between the two collided into a win-win situation.
According to people close to Fengwang Express, on the evening of May 14, Fengwang Express issued an "important notice on the relevant work of franchisees during the transition period" on the intranet, saying that 100% refund of the franchisee fee, 100% refund of the deposit, 100% refund of their account balance to the franchisee who actively applied for withdrawal from the network, and sent another "friendship money" to thank the franchisee for their support and contribution. It is understood that the introduction of the "friendship gold" program is the first time in the franchised express delivery industry.
1.183 billion yuan to sell the equity of Fengwang, focusing on mid-to-high-end express
In 2020, live streaming added a fire to the e-commerce market, and super anchors Li Jiaqi and Wei Ya continued to refresh the data of bringing goods, and live streaming e-commerce exceeded the scale of trillions.
The rise of live streaming e-commerce has promoted the growth of express delivery companies again, and some studies have shown that live streaming e-commerce has brought at least 10 billion pieces of business increment to the express delivery industry.
In response to the rapid growth of e-commerce parts and the fierce war of price war, in 2020, SF franchised express delivery brand Fengwang came into being. In September of that year, Fengwang officially launched the network and provided express delivery services to consolidate SF's moat.
SF Holding mentioned in its 2020 annual report that for the low-end e-commerce market, the company provides cost-effective products and services with the operation mode of the franchise network, gradually expands the sinking market share, promotes the rapid climb of production capacity, reduces costs and increases efficiency. With the blessing of Fengwang and special preferential allocation, as well as relying on the resource advantages of SF Four Network Financing, SF's economic express business has achieved rapid growth.
After three years of development, at present, Fengwang Express network has covered 27 provinces (municipalities and autonomous regions) across the country, with a revenue scale of more than 3.2 billion yuan in 2022, mainly serving e-commerce customers, and the overall network service quality is stable.
However, under the background of the homogenization of competitive products in the express delivery industry and the strategic needs of the company, abandoning the Fengwang business has become a choice that SF has to make. SF Holding said in the announcement that in view of the changes in the economic express market environment of the franchise model, the target company is still in the initial stage of development and continues to lose money, and this sale can eliminate the negative impact of the target company's losses on the listed company.
At the same time, the sale can also bring cash flow to SF and optimize profit indicators. SF expects that the equity investment income realized from the transaction will affect the company's consolidated net profit attributable to the parent by about 150 million yuan.
After the completion of the sale of Fengwang, SF can focus more on the development of core businesses such as domestic high-end express, international express, global supply chain services, and digital supply chain services in the future.
Taking the mid-to-high-end express delivery business as an example, as early as 2022, SF Holding mentioned in its financial report that it focused on the core strategy of logistics, reduced the proportion of low-gross profit products, and launched a differentiated product strategy. It is understood that in order to promote strategic coordination and business integration, earlier Fengwang used SF's direct network resources in transit distribution, trunk line transportation and terminal delivery, and the sale of Fengwang means that SF can better release the end-of-line delivery capacity of the direct network and focus on the high-end business market.
Of course, selling Fengwang does not mean giving up the e-commerce market.
SF Holding said in the announcement that the company will continue to build e-commerce express products, and the main "electric trademark fast" products have grown steadily, which can meet the diversified needs of customers in the mid-to-high-end economic express delivery market. At the results briefing in April this year, SF also made it clear that it will deepen its e-commerce return and cross-border supply chain business, and has reached cooperation with a number of e-commerce platform return business.
The diversified business represented by cross-border supply chain business is also an important direction for SF Express to focus on in the future in addition to mid-to-high-end express delivery. Earlier, SF Holding said at the annual shareholders' meeting that the company adheres to the road of differentiated services and will not blindly pursue the so-called piece market share.
Unlike a single express delivery service provider, SF Express explicitly transformed into an integrated logistics service provider in 2014. In recent years, SF has actively expanded its express express, cold chain, intra-city, international and supply chain businesses, especially after Kerry Logistics was integrated into SF's system, the rapid growth of supply chain and international business.
According to the 2022 financial report, SF's annual supply chain and international business achieved tax-free operating income of 87.87 billion yuan, a year-on-year increase of 124.1%, driving the overall proportion of new business revenue to increase from 38% in 2021 to 48.8% in 2022.
For Fengwang franchisees, the first "friendship money" plan is proposed
After unloading the burden, SF showed its responsibility and provided a bottom and a way back for Fengwang franchisees through financial and resource support.
The private express delivery industry has been turbulent for nearly three decades, and mergers and acquisitions are not uncommon. However, in these vigorous mergers and acquisitions in the express delivery industry in the past, the two parties often failed to achieve the effect of 1+1>2 after holding hands with high profile.
In the past, Shentong acquired Express, Youth Travel acquired Quanfeng, and later Suning acquired Tiantian Express, and Jitu acquired Best Best, and the integration process was not so satisfactory. In April 2017, CYTS Logistics acquired Quanfeng Express, and in the following two years, it was frequently revealed that the original promised by the hostel to franchisees and employees' deposits, salaries and other compensation had not been fully honored; Also in 2017, Suning entered Tiantian Express with 4.25 billion yuan, and then in the swing of the knife rectification, Tiantian Express franchisees were in a dilemma, forced by pressure to withdraw a large number of networks.
In M&A, there must be trade-offs, so it will inevitably involve the disposal and change of personnel, organization, strategy and other related matters. For both parties to the merger, after the "marriage" of real money capital, perhaps a more crucial part is how to properly guarantee the interests of all parties to promote the effective integration between the two.
SF's exit plan for Fengwang franchisees may provide some useful ideas for the industry.
On the evening of May 14, the third day of the sale announcement of Fengwang, Fengwang Express issued an "Important Notice on the Relevant Work of Franchisees During the Transition Period" on the intranet, which showed that in order to ensure the stability of the transaction and the network during the transition period, Fengwang will promote the transition period work in an orderly and efficient manner, fully respect the wishes of Fengwang franchisees, and make appropriate arrangements based on legal and contractual requirements.
SF used three 100% refunds and a friendship payment to ensure a smooth transition.
In terms of specific measures, for Fengwang franchisees who are willing to join the relevant parties of the transaction, Fengwang will fully assist and cooperate with them to carry out relevant work; For Fengwang franchisees who do not choose to join the transaction related parties during the transition period and actively apply to withdraw from the network, Fengwang will also fully respect their wishes, and refund 100% of the franchise fee paid for joining the Fengwang operation network, 100% refund the deposit paid to join Fengwang, and 100% refund the balance of the recharge account opened at Fengwang headquarters.
Fengwang also introduced the "friendship money" program in the franchised express delivery industry for the first time, which is a kind of care and comfort for franchisees who have worked hard with Fengwang in the past, and also highlights SF's social responsibility and integrity spirit as an industry leader. It is understood that the amount of "friendship money" will be based on factors such as the average daily delivery volume of franchisees in the past year, the time of network access, and the agency situation, and the cost is expected to reach hundreds of millions according to the scale of franchisees.
It is reported that as of the press release, Fengwang franchisees in some regions have completed the refund of deposits and franchise fees, as well as additional "friendship money" of Fengwang.
In addition, considering the employment of the franchisee's grassroots employees, for franchisees who withdraw from Fengwang Network during the transition period in this transaction, if the jobs of their employees cannot continue, Fengwang will coordinate with SF to provide corresponding job interview opportunities for franchisee employees who meet the recruitment standards, and give priority to franchisee employees under the same conditions.
From the three aspects of 100% refund, extra friendship money, and personnel placement, SF has done its best to provide an exit mechanism and reassurance support for the former Fengwang alliances, and injected a "shot of strength" into the franchisees.
SF Holding also clarified the profit and loss and compensation liability during the transition period in the sale announcement. It mentions that the profit or loss of the target group company from March 31, 2023 to the settlement date shall be owned or borne by the transferor; If the transferee suffers losses after the delivery date due to litigation, arbitration, administrative penalties and other compensation claims related to the franchisees, employees, suppliers and other assets of the target group company, the transferee has the right to recover from the transferor.