100 M&A Transactions Announced After the Release of STAR Market Eight Measures, with Transaction Value Exceeding RMB 24.7 Billion

Translated from Securities Times, Zhang Shuxian

Since the release of the "STAR Market Eight Measures," the market activity on the SSE STAR Market has soared, with 100 new transactions of mergers and acquisitions (M&A) announced, and the total disclosed transaction value has exceeded RMB 24.7 billion, reflecting robust development momentum.

Market activity intensifies, and the pace of transactions accelerates

In terms of relevant policies, the China Securities Regulatory Commission (CSRC) continues to convey positive signals. On May 7, Wu Qing, Chairman of the CSRC, voiced his support for listed companies undergoing transformation through M&A. He further announced the ongoing revision of relevant management guidelines and improvements to supporting measures. Amid this backdrop, the enthusiasm for M&A on the SSE STAR Market has been steadily growing. Data shows that since the beginning of this year, 39 new M&A transactions have been disclosed on the SSE STAR Market, including 19 cases of major asset restructuring using cash or asset purchases through issuance of shares and convertible bonds. Within just four months, this number has surpassed the annual total of 17 for 2024. Moreover, the number of major acquisitions using cash and share issuance transactions following the "STAR Market Eight Measures" has exceeded the combined total from 2019 to 2023. At the same time, the pace of transactions has significantly quickened. The restructuring project of RIGOL Technologies Co., Ltd. completed the process from being accepted to receiving approval for registration by the CSRC in just two months. Several other companies' M&A transactions have also made substantial progress.

Integration of industrial resources achieves synergy

All these M&A transactions are industrial in nature, focusing on resource integration and coordinated development. Acquiring companies within the same industry can result in product complementarity. For example, the acquisition of Shenzhen CXW Technology Co., Ltd. by Halo Microelectronics Co., Ltd. addressed technical gaps in the AC-DC chip sector, enabling the provision of complete solutions to customers. Acquiring upstream and downstream enterprises in the industrial chain helps expand product coverage. For instance, Shanghai OPM Biosciences Co., Ltd. acquired PharmaLegacy to enhance collaboration across the entire industrial chain. Acquiring mature overseas companies can facilitate expansion into international markets. For example, Gstarsoft Co., Ltd. acquired the Hungarian company CadLine to secure BIM products with independent intellectual property rights and gain entry into the overseas BIM market.

The diversity of M&A transactions is becoming increasingly prominent

M&A transactions on the SSE STAR Market are better aligned with the development characteristics of new quality productive forces. In terms of valuation, six cases, involving United Nova Technology Co., Ltd., have innovatively adopted the market approach, with some companies implementing valuation adjustment mechanisms. Regarding acquisition targets, 27 cases involve the intended acquisition of unprofitable enterprises to help companies secure positions in strategic sectors. For instance, the acquisition of related companies by National Silicon Industry Group Co., Ltd. is expected to improve the proportion of homemade 12-inch silicon wafers in China. In terms of payment tools, greater flexibility is demonstrated through the active use of methods such as private placements and M&A loans. In terms of transaction targets, some companies planning to conduct an initial public offering choose to achieve securitization through M&A. For example, Primarius Technologies Co., Ltd. acquired Actt to develop an integrated "EDA + IP" industrial model.

After the implementation of the "STAR Market Eight Measures," M&A transactions on the SSE STAR Market have shown a good trend of an increasing number, accelerating process and diversifying models, which has effectively promoted the high-quality development of companies listed on the SSE STAR Market.

The above information is provided for reference purposes only and does not constitute investment advice.