YICAI | CICC's Acquisition of Smaller Brokers Dongxing, Cinda Enters Regulatory Approval Stage
(Yicai) June 16 -- Brokerage giant China International Capital Corporation's acquisition of Dongxing Securities and Cinda Securities, two mid-sized competitors, has officially entered the regulatory approval stage.
The Shanghai Stock Exchange has accepted CICC's application for a share swap deal to buy and absorb Dongxing and Cinda, CICC said in a statement late yesterday.
On Nov. 19, CICC announced it had signed a preliminary share-swap merger deal with Dongxing and Cinda, aiming to create a firm with just over CNY1 trillion (USD147.9 billion) of assets. A month later, it unveiled the first detailed scheme for the share swap.
Late last month, CICC disclosed another draft acquisition plan, according to which the company would issue more than 3.1 billion Chinese mainland shares at a price of CNY36.68 (USD5.42) per share. The swap prices were set at CNY16.05 for Dongxing and CNY19.11 for Cinda, with swap ratios of one to 0.4376 and 0.5210, respectively.
CICC, Dongxing, and Cinda are all controlled by Chinese wholly state-owned investment company Central Huijin Investment. As of Dec. 31, Central Huijin directly held 40 percent of CICC and indirectly owned 45 percent of Dongxing and 79 percent of Cinda.
Once the deal is closed, the post-merger company will assume all assets, liabilities, businesses, employees, contracts, qualifications, and all other rights and obligations of Dongxing and Cinda, according to CICC.
CICC reported an operating revenue of CNY28.5 billion (USD4.2 billion) and a net profit of CNY9.8 billion (USD1.4 billion) last year, up 34 percent and 72 percent, respectively, from the year before. Dongxing and Cinda logged operating revenues of CNY4.7 billion and CNY4 billion, and net profits of CNY2.1 billion and CNY1.9 billion.
CICC had assets under management of CNY782.8 billion (USD115.8 billion) as of Dec. 31, while Dongxing and Cinda had CNY114.2 billion and CNY130 billion, respectively, for a total of just over CNY1 trillion.
CICC [SHA: 601995; HKG: 3908] rose 0.7 percent to CNY33.93 in Shanghai but fell 0.4 percent to HKD20.72 (USD2.64) in Hong Kong as of 10.45 a.m. today. Dongxing [SHA: 601198] inched up 0.5 percent to CNY12.93, and Cinda [SHA: 601059] gained 0.1 percent to CNY15.48.