The End Of The Era Of "Every Merger And Acquisition Will Rise": Seven Years Of Big Data Restore The Trend Of A-Share

After experiencing the "storm" in 2015 and 2016, tightening in 2017 and 2018, and digestion in 2019, the M & a market in 2020 ushered in a completely different situation - in this year, the activity of M & A transactions of listed companies fell into the lowest level in seven years.

According to the statistics of 21st century economic reporter, in 2020, both the number of transactions and the transaction amount will reach a record low, and there is also a lack of innovative trading schemes. Traditional listing methods such as backdoor listing are almost "extinct", and the "wealth making" effect brought about by M & a is also declining.

In 2020, A-share market completed 114 M & A transactions involving 566.691 billion yuan, which was nearly a cliff drop compared with 427 M & A transactions and 1087.44 billion yuan in 2014.

A more obvious sign is that, with the rapid spread of the registration system of the science and technology innovation board and the growth enterprise market, emerging industries gradually fade out of the M & a market, and the integrated restructuring has gradually become the mainstream. The 10 billion level M & A is mostly aimed at traditional industries.

Another data sorted out by our newspaper shows that only 16 of the 114 M & A transactions completed in 2020 involve emerging industries. Compared with the peak of M & A in 2014, 160 of the 427 M & A transactions completed during the year involve emerging industries. At present, the number of mergers and acquisitions and market share of emerging industries have declined significantly.

"M & A also talks about premium, but at present, the valuation of emerging industries generally goes up. For the M & A parties, the attractiveness of assets with higher prices will certainly decline. This is the normal situation in the capital market. When the overall stock market valuation is low, industrial capital M & A will be more active, while when the overall stock market valuation is high, financial capital will be more active." Pan Helin, executive director and professor of Digital Economy Research Institute of Central South University of Finance and law, pointed out in an interview.

Restructuring towards traditional industries

After the sharp tightening of M & A in 2017, the activity of A-share M & a market began to drop precipitously.

According to our statistics, since the peak of M & a market in 2014, the number of M & A transactions completed by listed companies has declined year by year, from 427 in 2014 to 114 in 2020.

The activity of the listed companies actively planning merger and reorganization is also getting lower and lower.

According to the reporter's statistics, in 2020, there are only 210 major restructuring events participated by A-share listed companies as buyers, of which 152 have been completed or are in normal progress. In 2015, when the enthusiasm of M & A was the highest, 345 and 282 respectively.

During this period, there are 16 M & A transactions over RMB 10 billion completed in 2020, which is at the medium level in the data from 2014 to 2020. During this period, the number of M & A transactions with a scale of more than 10 billion yuan reached the highest of 19 in 2014 and the lowest of 13 in 2018.

Among them, the case with the highest amount of M & A in 2020 is that China Merchants Shekou and Qianhai investment control jointly increase the capital of Qianhai free trade investment.

According to the public information, the subsidiary of China Merchants Shekou Holding Co., Ltd. of China Merchants Qianhai Industrial Co., Ltd., increased the capital of Qianhai free trade investment with its 100% equity of China Merchants CHIDI, and Qianhai investment control increased the capital of Qianhai free trade investment with its 100% equity of Qianhai Hongyu. At the same time, China Merchants Qianhai Industrial Co., Ltd. increased its capital with some cash. After the completion, China Merchants Qianhai industry and Qianhai investment control respectively hold 50% equity of Qianhai free trade investment. The transaction involved a total amount of 145.8 billion yuan.

From this case, we can clearly see the characteristics of the M & a market in 2020 - traditional industries and state-owned assets background become the most active elements, and emerging elements gradually "withdraw" from the restructuring market.

Among the 114 M & A transactions completed in 2020, only 16 deals with emerging industries, accounting for 14.04%. Compared with the market share of 22.92% in 2019, the market share of 37.47% in 2014 has a larger gap. It can be seen that the traditional industrialization trend of M & a market is significant.

Specifically, in 2020, mergers and acquisitions mostly aim at traditional industries such as food, chemical industry, construction, finance and nonferrous metals.

For example, through asset replacement, share issuance and cash payment, Sinorgchem acquired 32.81% equity of ENN energy at a price of 25.84 billion yuan, realizing the integration of the whole industry chain of natural gas; Dongfang energy made a price of 15.112 billion yuan to acquire capital holding, and State Grid Yingda set a price of 14.398 billion yuan to bring financial assets to the company; Valin steel set a price of 10.466 billion yuan to acquire Valin Xianggang , Hualing LIANGANG, Hualing steel pipe and Hualing energy saving Co., Ltd.

"On the one hand, the regulatory environment has changed. The market is very cautious about overvalued, high premium and cross-border M & A. if high-quality assets of emerging industries want to be listed, they can go through IPO channels; on the other hand, many private enterprises do not have the money to do M & A either." According to an interview with a former executive of a listed company in South China.

Make rich "aura" fade

On March 25, 2020, Shanghai Lexus completed the acquisition of 45% equity of GDS, a subsidiary of kirifard in Spain, with RMB 13.246 billion.

This is one of the few private listed companies acquiring emerging industries.

However, it is worth mentioning that the scheme has been planned since 2018 and has been revised for many times. After the final scheme is determined on March 7, 2019, the stock price only ushers in a limit.

In 2020, the A-share market disclosed a number of M & A cases of emerging industries, and there was no big "splash".

For example, Haizheng pharmaceutical, which disclosed in July of that year that dingzeng acquired 49% of the equity of Hanhui pharmaceutical, fell rapidly after the implementation of the scheme; in June, it announced that dingzeng acquired 50% equity of Dongfeng MAHLE, Dongfeng technology, which owns 50% shares of Shanghai frega and 50% shares of Dongfeng Thomson, etc., only rose by 4.16% the next day after the plan was put forward. Hongchang electronics, which announced its purchase of 100% shares of Wuxi Hongren, announced in March that it had only two trading limits

These scenes are in great contrast to the scene that five or six years ago, when there were more than ten trading limits, "every merger and acquisition will rise sharply".

In fact, from the perspective of the target of M & A, "hot spot" M & A in the A-share market is rapidly cooling down.

According to wind data, of the 427 M & A transactions completed in 2014, 160 involved emerging industries, accounting for 37.47% of the market share, covering computer, biomedical, Internet, information technology and other industries. In 2015, the market share of emerging industries was not low, and 109 of the 298 M & A transactions completed involved emerging industries, accounting for 36.58% The industry is relatively consistent with that in 2014.

However, in the M & a market in 2020, new energy, photovoltaic and other hot emerging industries in the year have not been seen. Only a few emerging industries such as "computer, communication and other electronic equipment manufacturing", "pharmaceutical manufacturing", "software and information technology services" have been installed, involving only 16 enterprises.

"It's a sign of maturity." Industry evaluation.

"We should not substantially increase the market value because of M & A, because there are still some risks in M & A, and M & A is not necessarily successful. At present, the capital market pays more attention to the track, that is, the products. Only when the products are put in front of us, the investment talents will rush for them. There is a long way to go from M & A to the formation of new products. " Pan and Lin said.

Integration is difficult to become a "roadblock"

Although as early as 2019, the new regulations on restructuring were implemented, many restrictions related to M & A were lifted, and the backdoor of GEM has been released. However, in one and a half years, the M & a market has not returned to active, and the first borrowing shell of GEM has not yet broken the ice.

The reporter of 21st century economic report learned that the enthusiasm of listed companies for M & A is not high, or mainly from two aspects: on the one hand, the listing path of emerging enterprises under the registration system is gradually smooth; on the other hand, it comes from many "sequelae" and "integration problems" left by irrational restructuring of the early market, which makes many listed companies flinch.

In 2019, the registration system reform of the science and technology innovation board officially opened, attracting many emerging industry companies to go public.

As of January 15, 2021, 217 science and technology companies have landed on the science and technology innovation board, with a total market value of 3359.057 billion yuan, an average p / E ratio of 94.55 times, and a total of 535 enterprises have been accepted.

In August 2020, the gem registration system was officially implemented. Up to now, there are 543 IPO accepting enterprises, of which 82 have been registered and most of them have been listed.

A senior executive of a medium-sized medical manufacturing industry listed company in South China told reporters that due to the smooth listing Road, the high-quality M & A assets that they like prefer to go through the IPO channel and choose to be listed on their own, which is not conducive to the industry's M & A integration.

In the face of the enterprises that have completed the merger and reorganization, it is another more grand proposition to realize the smooth integration and improve the quality and efficiency.

Another senior executive of the gem manufacturing industry in South China, who completed the reorganization earlier, told the reporter that he had a deep feeling in the process of corporate governance and integration. Many M & A cases in the market, after the takeover of listed companies by performance based gambling, appeared various problems, leading to the failure of M & A.

"For example, we can't get involved in too many benchmarking companies' control during the gambling period. First of all, the performance commitment party thinks that if the listed companies intervene in the operation (especially cross-border M & A), if the gambling is not completed, it is easy to wrangle. Secondly, it is easy to exclude the management personnel sent by listed companies and prevent them from actually participating in the operation and management. " The executive said.

In its view, in many M & A transactions in the market, the performance commitment party often only considers the short-term planning of the enterprise and ignores the long-term development in order to complete the performance.

This is obviously unfavorable to the takeover of listed companies. In order to complete the performance, many companies are easy to think of various ways. Based on these reasons, considering the stability of stock price and so on, the listed companies are easy to "collude with the gamblers".

"In the final analysis, the listed companies should have good foundation and high quality. It is suggested that the regulatory authorities should optimize policies and further strengthen guidance and training. Or in the examination and approval process, we should go into the listed companies for understanding. Let M & A promote the healthy development of listed companies and make them stronger and bigger. " The executive said.

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