Guolian Securities' plan for merger and acquisition of Minsheng Securities was released: the issue price was 11.31 yuan per share, and the supporting raising did not exceed 2 billion yuan

Reporter Luo Ji reports from Beijing

The first large-scale merger and acquisition case of a securities company under the new "National Nine Articles" - Guolian Securities' merger and acquisition plan for Minsheng Securities was released.

On the evening of May 14, Guolian Securities (601456. SH) announced that the company intends to purchase 100% of the shares of Minsheng Securities held by 46 counterparties such as Guolian Group and Fengquanyu at a price of 11.31 yuan per share by issuing A shares, and raise matching funds of no more than 2 billion yuan from no more than 35 specific investors for the development of Minsheng Securities business.

At present, the final transaction price of the underlying asset at the core of the transaction has not yet been determined.

Considering the large scale of Minsheng Securities' assets, the acquisition consideration will determine the issuance scale of Guolian Securities. At present, the total share capital of Guolian Securities is 2.832 billion shares. Minsheng Securities' net assets attributable to the parent company at the end of 2023 were 15.802 billion yuan. This means that even if calculated according to the price-to-book ratio of 1 times, the issuance scale (including the top-level supporting fundraising, the same below) will exceed 1.5 billion shares. The merger and acquisition case has a great impact on the change of the equity structure of Guolian Securities, which also counter-launches the game of the transaction price and supporting fundraising and subscription.

Guolian Securities mentioned: "At present, the audit and evaluation of the target company has not yet been completed, and the transaction price involved in the issuance of shares to purchase assets will be based on the evaluation results of the appraisal report issued by the asset appraisal agency in accordance with the provisions of the Securities Law and filed by the competent state-owned assets regulatory agency, which shall be determined by the parties to the transaction through negotiation." ”

The transaction price may be between $15.8 billion and $30 billion

According to the announcement of Guolian Securities, the transaction form of the merger and acquisition is to issue shares to purchase assets and raise matching funds.

Among them, the issue price of issuing shares to purchase assets has been confirmed, which is 11.31 yuan per share. The issuance target is all shareholders of Minsheng Securities, a total of 46, holding a total of 100% of the shares of Minsheng Securities. However, the share consideration has not yet been released.

For the part of raising matching funds, the total amount of shares raised shall not exceed RMB 2 billion (including the principal number), the number of A shares to be issued shall not exceed 250 million shares (including the principal number), and the issue price shall not be less than 80% of the average trading price of Guolian Securities shares in the 20 trading days before the pricing benchmark date of the raised matching funds (the first day of the issuance period of the raising supporting funds), and shall not be less than the net assets per share attributable to the ordinary shareholders of the parent company in the latest audited period of Guolian Securities before the issuance.

At present, the 2023 annual report of Minsheng Securities has been disclosed. As of the end of 2023, Minsheng Securities has total assets of 59.942 billion yuan, net assets attributable to the parent company of 15.802 billion yuan, and net assets per share of 1.39 yuan. At the same time, in 2023, the operating income will be 3.799 billion yuan, an increase of 50.05% year-on-year, and the net profit attributable to the parent company will be 681 million yuan, an increase of 222.68% year-on-year. earnings per share was 0.06 yuan, and the return on equity was 4.41%.

If calculated according to the average price-to-book ratio of the current listed securities companies of 1.5 times, the scale of the transaction (including the top-level supporting fundraising, the same below) may exceed 25 billion yuan. Among them, the issuance scale of only the purchase of assets may be close to 2.1 billion shares, and if the supporting issuance is completed, the total issuance scale may be more than 2.3 billion shares. If calculated according to the data of Guolian Securities' 2023 annual report and the above-mentioned issue price of 11.31 yuan per share, the price-to-book ratio of Guolian Securities is about 1.8 times. If the price-to-book ratio of Minsheng Securities is calculated, the scale of this transaction may be about 30 billion yuan.

A higher reference is the price at which Guolian Development (Group) Co., Ltd. (hereinafter referred to as "Guolian Group") bid for 30.3% of the equity of Minsheng Securities. According to the auction hammer price of 9.105 billion yuan at that time, the issuance scale of this merger and acquisition may be close to the current total share capital of Guolian Securities.

A market source pointed out: "Generally speaking, under diversified shareholdings, small and medium-sized shareholders have relatively weak ability to negotiate prices. However, if the asset quality is good and the acquirer is sincere, it is difficult for the transaction price to be lower than the net assets. ”

At present, Guolian Group has obtained a controlling stake in Minsheng Securities. At the same time, Minsheng Securities holds more than 5% of the shares of the only shareholder Shanghai Fengquanyu Enterprise Management Co., Ltd. (13.58%), and the other 44 shareholders hold a small shareholding, of which 38 shareholders hold less than 2% of the shares.

With the above two extreme situations as the price "anchor point", the final price of Minsheng Securities may be generated between them, that is, the net assets of 15.802 billion yuan and the estimated auction price of 30 billion yuan are the boundaries at both ends.

The size of the issuance may be relatively large

Based on the above simple calculation, the overall issuance size that the transaction may point to is between 1.6 billion shares (including the supporting offering of the top price, the same below) to 2.9 billion shares. Considering that the current total share capital of Guolian Securities is 2.832 billion shares, the shareholding structure of Guolian Securities may change a lot in the future.

Guolian Securities mentioned in the announcement: "After this transaction, the controlling shareholder and actual controller of the listed company will not change. In view of the fact that the transaction price of the underlying assets of this restructuring has not yet been determined, the equity changes before and after this transaction cannot be calculated. ”

According to the latest data, as of April 25, 2024, among the top ten shareholders of Guolian Securities, Guolian Group and its subsidiaries occupy more seats.

Among them, Guolian Group holds 19.21% of the shares and is the largest shareholder. Guolian Trust Co., Ltd. (hereinafter referred to as "Guolian Trust") holds 13.78% of the shares, Wuxi Guolian Local Power Co., Ltd. (hereinafter referred to as "Guolian Local Power") holds 9.43% of the shares, Wuxi Minsheng Investment Co., Ltd. (hereinafter referred to as "Wuxi Minsheng Investment") holds 2.6% of the shares, Wuxi Yimian Textile Group Co., Ltd. (hereinafter referred to as "Wuxi Yimian") holds 2.57% of the shares, and Wuxi Huaguang Environmental Protection Energy Group Co., Ltd. (hereinafter referred to as "Wuxi Huaguang Environmental Protection") holds 1.03% of the shares , respectively, the third, fourth, fifth, sixth, and seventh largest shareholders.

Guolian Trust and Wuxi Huaguang Environmental Protection are the holding subsidiaries of Guolian Group; Guolian Local Power, Wuxi Yimian and Wuxi Minsheng Investment are all wholly-owned subsidiaries of Guolian Group. Based on this calculation, Guolian Group currently directly and indirectly holds a total of about 48.62% of the shares of Guolian Securities.

At the same time, in this merger and acquisition, Guolian Group has held 30.49% of the shares of Minsheng Securities. This means that after the merger and acquisition, the equity structure of Guolian Securities still has a certain degree of stability, and the position of the controlling shareholder of Guolian Group and the actual controller of Wuxi state-owned assets is difficult to shake. However, in order to maintain the total proportion of direct and indirect shares held by Guolian Group at a high level of nearly 50%, it may be necessary to actively participate in the supporting fundraising part.

At present, according to the rules, the target of the issuance of the supporting fundraising part has not yet been confirmed. This part of the issuance object will ultimately be determined by the board of directors of Guolian Securities and the authorized person of the board of directors in accordance with the authorization of the general meeting of shareholders, after the reorganization is approved by the Shanghai Stock Exchange and registered by the China Securities Regulatory Commission, in accordance with the provisions of relevant laws, regulations and normative documents and the issuance bidding situation, in accordance with the principle of price priority and other principles in the bidding method to negotiate with the lead underwriter of the matching funds raised.

Although the issue price of new shares is 8% higher than the closing price of Guolian Securities on the day of the announcement, the corresponding PB is 1.79 times according to the net asset data disclosed in the first quarter of 2024. At the same time, the synergies after the merger and acquisition are expected to be fully utilized, and the integration effect is worth looking forward to. ”

Respond to the rising trend of industry concentration

According to the estimation of Soochow Securities, referring to the situation in 2023, if dilution is not considered, the total net assets attributable to the parent of Guolian Securities and Minsheng Securities will be 33.571 billion yuan, and the net assets attributable to the parent company after the merger are expected to rank 20th in the industry after the merger.

In fact, the securities industry is currently facing an acceleration of differentiation and consolidation. On the one hand, the competition between industry players has become more intense, and the industry concentration has further increased. On the other hand, the internationalization and globalization of the securities industry has increased, foreign securities companies have entered the Chinese market, and Chinese securities companies have also vigorously expanded their overseas business, and opportunities and challenges coexist in the securities industry.

In the context of the development of securities companies from traditional intermediary business to capital intermediary business, the concentration of the securities industry will continue to accelerate, and the market share will continue to be concentrated in large securities firms with leading capital and resource strength. Especially with the rapid development of derivatives business and market-making business in recent years, securities companies with strong capital strength, large business scale and low financing cost have a more obvious leading edge in market competition.

Under the above new situation, securities companies urgently need to enhance their financial strength, attract high-end talents, expand their business scale, enrich their business resources, and achieve a jump in comprehensive strength.

"This transaction can build a large-scale securities company with leading business scale, strong capital strength and large market influence, make full use of Wuxi's industrial advantages and shareholder empowerment, Shanghai's financial resources and talent gathering advantages, realize the expansion of business geographical territory, the sharing of customer and channel resources, the complementarity of business advantages, and achieve synergy in various businesses, so as to achieve leapfrog development and obtain opportunities for development and growth in the increasingly fierce market competition." Guolian Securities mentioned.

From the perspective of the complementarity of the two brokerages, from the perspective of business, Minsheng Securities' investment banking business strength is outstanding, and it also has strong advantages in the fields of institutional research and sales business, equity investment business, etc.; Guolian Securities has distinctive characteristics and advantages in wealth management, fund investment advisory, asset securitization and derivatives business. From a regional point of view, Minsheng Securities' branch outlets focus on Henan and have a strong market influence in Henan, while Guolian Securities has a strong market influence and high market share in Wuxi and southern Jiangsu.

"In the future, after the integration of the two brokerage businesses, they will further strengthen their respective regional advantages and significantly enhance the overall market competitiveness." Soochow Securities mentioned in its research report.

(Editor: Xia Xin Review: He Shasha Proofreader: Yan Jingning)