The Analysis Of Extraordinary China's Acquisition Of 25% Lining Shares Is Called TPG Checks And Balances.

Yesterday, Lining The company announced that the two major shareholders of the company, Victory Mind and Dragon City, entered into a sales agreement with the extraordinary China holding company in October 12th and will sell 266 million shares to the extraordinary China, accounting for about 25.23% of the issued share capital of the company. The buyer of this transaction is extraordinary China, also controlled by the Lining family.

　　 Indirect holding Li Ning Co

Notice shows that Extraordinary China The total price of the acquisition of Lining shares is about HK $1 billion 359 million, which will be paid in two ways. The first is through the issuance of "five in one" (i.e. joint stock, each five shares of a share) after the 1 billion 780 million share price of the share payment, the price per share is HK $0.325 (completion of the "five in one" after the price). In addition, the extraordinary China will issue a permanent subordinated convertible bond with a principal amount of HK $780 million.

Yesterday, the responsible person of Li Ning Co authorized public relations company said, "this is a transaction between Mr. Lining and the extraordinary China. Lining has no change in his company's position, position and authority."

After the completion of the transaction, the shareholding of Lining and his family in the extraordinary China increased from 55.88% to 70%. "Lining himself will indirectly hold Li Ning Co shares through extraordinary China." The official said that the extraordinary China will become the single largest shareholder of Li Ning Co, and Victory Mind and Dragon City will no longer hold any shares.

The origins of Li Ning Co and the extraordinary China can be traced back to two years ago. Public information shows that in April 2010, Lining and his elder brother Lee bought and sold about HK $700 million to buy energy saving (later renamed the extraordinary China). Since then, it has been willing to buy 30.9% of Lining's shares in a bid to convert Lining's share of the previously held energy saving convertible into common stock. After the conversion, Lining brothers held a 63.2% stake in energy saving, and became a controlling shareholder of fast energy saving.

　　 Analysis called acquisition checks and balances TPG

This time, Lining and his family held two Hong Kong listed companies announced the "complex" equity swap transactions, speculation by the outside world that Lining intends to re-enter the real estate industry. Li Ning Co said yesterday that the transaction has not changed significantly for Li Ning Co's direction and future business policies and strategies. Li Ning Co has not agreed to any commercial arrangements with the extraordinary China for this transaction. After more than 20 years of development, Li Ning Co's business model has been clear and stable, and the company's goal is to focus on the Chinese sporting goods market. Li Ning Co said recently that it would adjust and shrink the brand of small business stress, "focusing more on core business".

A Li Ning Co executive who has resigned said that Lining had reached a sale agreement with the extraordinary China at that time, more probably because of the checks and balances of TPG. TPG has said that there is a capital increase plan, if TPG holding Lining, may not be able to comply with Lining's idea of returning to the nature of sports to run the company. Secondly, there is a lack of entity business in China. It is a company engaged in athlete brokers. However, the athletes are limited in their resources and do not make much money. Holding Li Ning Co is beneficial to them.

Statistics show that TPG is currently the second largest shareholder of Lining, holding 13%. TPG has 8 full-time executives stationed in Lining, 2 of whom have entered the board of directors.

　 Stock price

Lining fell 4%

Extraordinary China rose 84%

After the announcement of the takeover, Lining resumed his trading yesterday and encountered investors' vote with feet. On that day, the stock price fell more than 4%, while the extraordinary Chinese stock price rose more than 80%, and the trend of the two shares became serious.

Lining and extraordinary China reported HK $4.83 and HK $0.065 respectively before the suspension. After yesterday's opening, Lining stock price All the way down to 4.53 Hong Kong dollars after a slight rebound, then the whole day showed a sidewalk finishing situation, and again before the end of the probe. At the close, Lining reported HK $4.6, down 4.76% before the stop. Extraordinary China rose by 132% on the same day and ended up at HK $0.12, or 84.6%.

Some analysts believe that this transaction gives investors doubts, worried that Lining himself intends to reduce Li Ning Co's stake in the future, which may be the reason for yesterday's share price differentiation. In addition, the performance of Li Ning Co is not satisfactory. The company's net profit in the first half of this year was 44 million yuan, a sharp decline of 84.9% compared with the same period last year, with a revenue of 3 billion 880 million yuan, a decrease of 9.5% over the same period last year.

　 Storm wave

Problems of loss and closure

Since last year, Li Ning Co issues have been continuously closed, store closing, senior executives leaving, inventory backlog, market capitalization 4 years down 76%, declining orders. They are all in front of the Li Ning Co. Li Ning Co issued a profit warning earlier, the sales revenue in 2012 may be negative compared with the same period last year. In the fourth quarter of 2012, the total number of orders for Lining products decreased double digits. Earlier, Merrill Lynch Merrill Lynch predicted that Li Ning Co's annual loss in 2012 would be around 226 million yuan.

Apart from losses, staff turnover is also a problem that Li Ning Co must face. The Li Ning Co issued a notice on October 12th. "The executive director and chief financial officer of the company, Mr. Zhong Qi, has resigned as director and chief financial officer of the company and has entered into force since November 1, 2012. Secretary Li Hong has resigned as the company secretary of the company and has entered into force since October 15, 2012. The announcement said Zhong Zhong Qi had pursued other career development, but he and Li Hong would still serve as Li Ning Co advisers after leaving office.

Following the resignation of CEO Zhang Zhiyong 3 months ago, Zhong Zhong chess became the second top executive. In October 15th, fashion brand announced that Zhang Zhiyong would be an independent non-executive director of the company.

Industry analysts believe that Lining's acquisition is his personal behavior, not directly related to Li Ning Co, which will not be obvious to the impact of Li Ning Co's performance. The only idea that may affect shareholders is that Lining is "not focused enough".