Regulators Tighten The "Asset Assessment", "Performance Commitments" Two Major Points Of High Premium Acquisition Whether Or Not The Biya Still Want To Restart.

In February 19th, Boya bio dropped 5.78%. On the night before, the company's 8 month plan for mergers and acquisitions was rejected by the SFC.

In the fourth meeting of the Commission on mergers and acquisitions held in a special line video conference, the purchase of assets in Boya biological issue shares was not approved by the SFC. It became the first single year in the rat year. At the same time, it is also the second second listed companies in the 7 mergers and acquisitions listed companies since 2020.

The merger and reorganization Commission pointed out that the Biya application documents did not fully disclose the reason and rationality of the substantial increase in the reporting period of the underlying assets, and did not fully disclose the reasonableness of the basis for the performance prediction, which did not conform to the forty-third regulation of the listed company's major asset reorganization management measures.

The premium rate up to 13 times the acquisition, under the background of merger and reorganization deregulation, was monitored by pause button. In the view of the industry, this reflects the "strict censorship" of the regulators, and the "zero tolerance" attitude of the restructured cases such as "flicker style", "follow suit style" and "interest transfer".

High price acquisition cited questioned

According to public information, Boya bio acquired 48.87% stake in Roy bio by issuing shares and Switching Company bonds and paying cash. Together with Boya bio's 11.68% stake in Roy bio, which was purchased in December 2019 for 175 million yuan in cash, if the reorganization is successful, Boya bio will hold 60.55% stake in Roy bio and control the latter.

Roy bio is an indirect shareholding company of Boya biological control group, which is mainly engaged in vaccine research and development. According to the Research Report of Guoxin Securities, Roy bio A group C group meningococcal polysaccharide conjugate vaccine has a market share of over 70% in 2018. Boya biological industry is the development and sale of blood products. If the acquisition is successful, the main business of the listed company will extend to the vaccine field.

However, the Biya's prediction of the purchase price and future performance has aroused widespread market doubt.

According to the evaluation report issued by Beijing Tianjian Xingye Asset Appraisal Co., Ltd., the result of the income method is as follows. Up to September 30, 2019, the book net value of 100% assets of Luo Yi was 110 million yuan, the assessed value was 1 billion 504 million yuan, and the appreciation value was 1 billion 393 million yuan, and the value added rate was 1265.08%.

Therefore, the assessment value of the 48.87% equity interest of Roy bio is 735 million yuan. On this basis, the transaction consideration of the merger is determined to be 778 million yuan, which is further 5.90% higher than the assessment value.

Behind the high premium deal is a higher performance commitment.

The counterparty undertakes that in the next 2019-2022 years, the net profit of Roy bio belonging to shareholders of the parent company will be no less than RMB 71 million yuan, 90 million yuan, 120 million yuan and 140 million yuan after deducting non recurring gains and losses.

It is worth noting that in 2017, 2018 and 2019 1-9, the net profit of Luo Yi's biological deduction was only -4182.98 yuan, 19 million 269 thousand and 900 yuan and 52 million 456 thousand and 600 yuan, with operating income of 167 million yuan, 188 million yuan and 214 million yuan respectively.

The reason why Luo Yi's large losses in 2017 and the sudden sharp increase in 2018 and 2019 were attributed to changes in sales structure and improvement of profitability (strengthening the promotion and penetration of two types of vaccine inoculation sites with higher sales price) and increasing production to reduce unit costs and reduce asset impairment losses.

According to Biya biological disclosure, the shareholders of the target company in 2017 changed their main management team, cleaned up the accounts in full, prepared bad debts for unproved funds, and wrote off some of the funds.

The assets impairment losses calculated mainly include overall liquidation of the previous assets after replacement of shareholders, provision of bad debts for unrecoverable funds, and provision of inventory depreciation for products that are not expected to be sold. In addition, the sale of hemorrhagic fever vaccine was not as good as expected. The target company cleaned up the stock of hemorrhagic fever vaccine, and prepared some price drops for some products, totaling 14 million 105 thousand yuan.

However, this explanation does not seem to have been recognized by the SFC. The merger and reorganization Commission believes that the reason and rationality of the substantial increase in Roy's biological reporting period is doubtful.

On the same day, people from Boya bio Securities Department said: "in recent years, Roy bio's performance is very good. The vaccine industry adopts the" one vote system ", which is not the same as that of ordinary pharmaceutical enterprises. Moreover, due to the 2015 Shandong vaccine and longevity biological events, the whole industry has also undergone some changes, so the rationality of the performance may not be very conventional from the perspective of regulation. To understand. "

After the high growth rate was questioned, returning to the high premium and high performance promise of Roy bio was not accepted by the market.

Prior to that, Boya biology has disclosed that in 2020 and 2021, the sales revenue of Roy bio will come from the existing products, AC, epidemic cerebrospinal fluid vaccine and hemorrhagic fever vaccine, and the growth rate of revenue is expected to remain above 20%.

But in May 2019, Roy bio activated bacterial workshop technology transformation, AC epidemic cerebrospinal fluid vaccine is in a state of discontinued production. The company plans to complete technical transformation and GMP certification in the first half of 2020, and is expected to resume production around May 2020.

If the re certification is not completed within the planned period or if the production workshop does not meet the requirements of the GMP, it will be difficult for Roy bio to deliver the goods properly, which will adversely affect the company's operation.

In addition, according to Roy bio prediction, the capital expenditure of the company in 2020 -2024 will be 23 million 530 thousand yuan, 15 million 960 thousand yuan, 11 million yuan, 13 million yuan and 12 million yuan respectively, and in 2025 and 2026, the forecast of capital expenditure is zero.

Insiders suspect that the sharp reduction in capital expenditure will undoubtedly increase Roy's forecast of free cash flow, thereby pushing up its valuation.

Strictly examine the acquisition of high premium

Although there are more doubts in the market, Boya did not give up the acquisition of Roy bio.

Boya bio Securities Division pointed out: "we will consider restarting the acquisition in the future, because we now hope to enter the field of vaccine, we will continue to push forward this work, we will communicate with the other shareholders on the trading plan, and make the work done in this area."

In recent years, due to the frequent risk of mergers and acquisitions, regulators have moved forward regulatory ports, strengthened the supervision of high goodwill mergers and acquisitions from the source, stressed the feasibility of the evaluation process and performance commitments, etc.

"For the reporting period and the high income forecast in the coming years, the SFC is very tight now. We understand that some of the reorganizations have lowered their performance commitments and valuation." A private equity fund pointed out.

Jiangsu, Thorpe, Wan Bangde, etc., which have been cutting down on earnings forecasts and valuations because of overvaluation and delay in obtaining regulatory approval, are typical cases.

Thorpe, who was in Jiangsu in November 2019, has made a breakthrough of three degrees in order to buy the new development of acetic acid and derivatives business and chemical industry of the controlling shareholder, Thorpe group. Finally, after the transaction consideration was adjusted from 4 billion 52 million yuan to 4 billion 52 million yuan and three years from 1 billion 698 million yuan to 1 billion 380 million yuan, the securities and Futures Commission was conditionally approved by the securities and Futures Commission.

Wan Bangde's takeover of the controlling shareholder's Wan bond pharmaceuticals was equally volatile. The purchase price was reduced from 3 billion 400 million yuan to 2 billion 731 million yuan, and the performance commitments also varied from 2018 to 2020. The net profit was not less than 185 million yuan, 250 million yuan and 325 million yuan respectively, and the net profit after adjustment changed from 2019 to 2022. The net profit was not less than 185 million yuan, 227 million yuan, 264 million yuan, 313 million yuan respectively.

In fact, in 2018, Wan Bang pharmaceutical did not complete its initial performance commitments. The net profit after that year was only 153 million yuan.

"Now we will put more work on the front-end, and we will be more strict in the supervision of the high premium acquisition and reorganization front. We will pay special attention to the process of asset appraisal, why the valuation premium is so high, the performance commitment can be realized, and the subsequent performance compensation. In fact, we will continue to look at the target situation and see whether the performance can meet the target. Even after the commitment period, we should pay attention to whether there has been a sharp decline in the performance of the commitment period. People close to the regulators said.

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