Recently, the Shanghai Stock Exchange held a symposium on mergers and acquisitions of listed companies in Shanghai. The 21st Century Business Herald reporter learned that the regulatory authorities are actively studying the establishment and improvement of the "green channel" for the merger and acquisition of technology-based enterprises that break through key core technologies, optimize the "small and fast" review mechanism, and implement the inclusive policy of appropriately improving the valuation of asset-light technology-based enterprises.
In recent years, the STAR Market has disclosed more than 350 asset transactions, all of which are industrial mergers and acquisitions in the same industry or upstream and downstream. In 2021, after the new regulations on major asset restructuring were revised in the entrepreneurship and entrepreneurship sector and the "small and fast" restructuring mechanism was officially introduced, the efficiency of equity M&A transactions of technology enterprises has been significantly improved, which has effectively stimulated the feasibility of more enterprises to become bigger and stronger with the help of mergers and acquisitions.
At present, the regulator's statement on the establishment of a "green channel" for the restructuring of science and technology enterprises and the further improvement of the review mechanism has once again aroused widespread concern in the market.
"The establishment and improvement of the 'green channel' for mergers and acquisitions of science and technology enterprises that break through key core technologies is positive, which can improve the financing efficiency of mergers and acquisitions, and help promote the leapfrog development and rapid growth of science and technology enterprises through mergers and acquisitions. Tian Lihui, dean of the Financial Development Research Institute of Nankai University, told the 21st Century Business Herald reporter.
"Green Channel" for Dispute M&A
During the critical period of the transformation of old and new kinetic energy, strategic emerging industries such as artificial intelligence, digital economy, industrial machine tools, high-end equipment manufacturing, and new energy continue to have strong demand for mergers and acquisitions to make up for the shortcomings of the industrial chain and strengthen advantageous industries.
Wind data shows that since 2023 (as of the evening of December 24), there have been a total of 212 major restructuring events (including termination cases) based on the latest disclosure date, an increase of 26.19% from 168 in 2022, with a total transaction value of more than 566.390 billion yuan.
Among them, strategic emerging industries are the main force participating in mergers and acquisitions, machinery manufacturing, IT, semiconductor and electronic equipment, biotechnology, medical and health care and other fields continue to maintain a high degree of transaction activity, and many cases of cross-border acquisitions have emerged.
More typically, in April this year, Infineon (300582. SZ) announced the successful acquisition of OSRAM's Eurasia Digital Systems business for 550 million euros, the former is a high-tech enterprise engaged in the research and development, production, sales and technical services of LED drive power supplies, and the latter products are mainly LED drive power supplies, LED modules, LED light engines and electronic control devices, which are used in commercial, agricultural, industrial and other fields.
In November this year, Roman shares (605289. SZ) also announced the acquisition of a 100% stake in the company's strategic partner, Holovis in the United Kingdom, a company engaged in creative content production and virtual reality technology.
In the view of market participants, science and technology enterprises are different from traditional industries, with long technology precipitation period, high upfront investment, high growth potential, fast growth rate and other characteristics, industrial mergers and acquisitions logic is different, optimizing the restructuring policy of related industries is expected to help the industry revitalize resources, to achieve high-quality development of leading enterprises.
"This move is of great significance for promoting the restructuring and integration of the science and technology industry, and is expected to accelerate the integration of the science and technology industry, optimize the resource allocation of the science and technology industry, and promote the transformation and upgrading of the science and technology industry, so as to enhance the international competitiveness of the mainland science and technology industry. Tian Lihui said.
However, some industry insiders believe that at the current stage, technology companies are more cautious about mergers and acquisitions, and policies such as audit systems and valuation inclusiveness may not be the key factors for enterprises to consider.
"The core of the current restructuring market is not the issue of review, but the difficulty of the game between the two sides of the transaction. Because the valuation of some technology companies may have been raised relatively high in the early financing process, although the market situation is not good now, shareholders psychologically cannot accept the decline in corporate valuation. For listed companies, especially private enterprises, he is responsible for his future development, and the goodwill explosion caused by the last round of mergers and acquisitions has taught a very profound lesson, and he is very cautious about restructuring. A senior brokerage investment banking department in Shanghai was interviewed and pointed out.
Wang Jiyue, a former senior investment banker, also believes that "the key to M&A review is not whether to launch a green channel, but to pay attention to the identification and disclosure of transaction risks, especially for cross-industry mergers and acquisitions, improve policies from the logic of the industry, and improve the quality of listed companies." ”
Tian Lihui also added that the correct implementation of green channel-related measures needs to ensure transparency and fairness, and prevent improper benefit transfer and power rent-seeking. At the same time, it is necessary to strengthen risk control and compliance management to prevent problems such as blind expansion and excessive leverage.
Regarding the "breakthrough of key core technologies" mentioned by the regulator, Tian Lihui believes that it is necessary to comprehensively consider many factors such as technological innovation, market prospects, technical barriers, industrial chain driving and social benefits. At the same time, in actual operation, it is also necessary to formulate more specific and operable standards and indicators in combination with the characteristics and requirements of specific industries and fields.
The M&A market has recovered modestly
It is worth mentioning that this is not the first time that the regulator has issued favorable policies for the M&A market.
In recent years, the regulator has continued to promote the market-oriented reform of mergers and acquisitions, and the supporting systems and rules of the M&A market have been improved day by day.
As early as 2019, the China Securities Regulatory Commission (CSRC) revised the relevant regulations on restructuring, including optimizing the relevant system of performance commitments, and removing the "net profit" indicator in the criteria for restructuring and listing, so as to promote the tilt of market resources towards high-tech industries and technology-based companies.
Since the second half of 2023, the China Securities Regulatory Commission (CSRC) has successively relaxed the restrictions on the floor price of share issuance and restructuring, extended the validity period of financial information for equity issuance restructuring, introduced new regulations and new policies such as restructuring directional convertible bonds, and clearly proposed to "appropriately improve the valuation inclusiveness of the restructuring of asset-light technology-based enterprises".
On December 19, the Shanghai Stock Exchange held a symposium on mergers and acquisitions of listed companies in Shanghai, attended by representatives of securities companies, investment institutions and listed companies, focusing on mergers and acquisitions in the field of scientific and technological innovation, and exchanging views on issues such as valuation rationality, performance commitment supervision, payment instrument selection and restructuring review efficiency, which are of general concern to the market.
"We think it's very good to innovate M&A and restructuring-related payment tools, such as the launch of directional convertible bonds. In terms of further improvement, we believe that we can consider allowing listed companies to reserve a certain proportion of the funds raised from refinancing for special reserve funds for mergers and acquisitions, which can be used for future mergers and acquisitions transactions of listed companies. Yin Zhongyu, assistant general manager of the Federal Reserve Securities and head of the M&A business department, said.
In his view, in the current market environment, there are major uncertainties in the approval cycle and feasibility of refinancing of listed companies, so it is difficult to operate ready-made M&A projects as fundraising and investment projects, because the counterparty is often unwilling to bear the above uncertain risks.
In fact, under the warm wind of a series of policies, since the beginning of this year, the M&A market has also shown a moderate recovery trend, and the logic of industrial M&A has continued to deepen.
In addition to the continuous increase in the number of restructuring transactions in the whole year compared with 2022, in terms of transaction size, as of the evening of December 24, 2023, a total of 13 companies have exceeded 10 billion yuan in transaction scale this year, which is also more than 11 in 2022 (excluding enterprises that failed to restructure).
During this period, the logic of industrial mergers and acquisitions continued to strengthen. Among the 212 major restructurings, 155 were asset acquisitions initiated by listed companies, of which industrial mergers and acquisitions for the purpose of horizontal integration and strategic cooperation accounted for 70%.
More typical ones such as Dabeinong (002385. SZ) acquired the controlling shareholder of Aonong Biotech (603363.SH) and signed a cooperation intention agreement to carry out strategic cooperation in supply chain sharing, joint procurement, business resource integration, asset integration, equity cooperation and other aspects, and Shenyang Machine Tool (000410.SH) acquired 100% equity of Zhongjie Aerospace and 100% equity of Zhongjie Factory, and the merger and acquisition targets are in the field of high-end CNC machine tools.
Looking ahead to 2024, many respondents believe that the trend of the M&A and restructuring market stabilizing and rebounding is expected to continue, but the significant increase in M&A cases and the overheated wave of irrational M&A will not appear.
"On the surface, the IPO speed is slow, and some companies want to sell, but in reality, mergers and acquisitions have always been a small probability and big risk event. Therefore, the mergers and acquisitions of listed companies have long become rational. In the past, many mergers and acquisitions were motivated by increasing the stock price to facilitate the reduction of holdings or pledge financing, but now that the reduction of holdings is restricted, the motivation of the listed company itself is limited. M&A based on industrial logic has little to do with whether the IPO is tightened. Wang Jiyue said.
Yin Zhongyu also pointed out that the future is the world of industrial mergers and acquisitions, and the target company is more willing to cooperate with large-capitalization listed companies, and the hype of the "restructuring concept" by secondary market investors will also tend to be rational. "The future market value of 5 billion will be a watershed, historically Hong Kong stocks, US stocks, and the volume and price of small and medium-sized listed companies will continue to shrink." The mergers and acquisitions led by large-capitalization listed companies will make the foundation of the bull market more solid in the future.
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