The Establishment Of The Federal Reserve'S M & A Research Center

Yang Ping, a researcher at the securities merger and acquisition research center of the 21st Century Capital Research Institute, reports from Shenzhen

When will the glory of A-share registration system shine into the M & a market?

This is the theme of "2020 A-share M & a market report" issued after the formal cooperation between the 21st Century Capital Research Institute and the Federal Reserve securities to build the M & A Research Center.

Recently, the 21st Century Capital Research Institute Federal Reserve securities merger and Acquisition Research Center (hereinafter referred to as: 21 Capital Federal Reserve merger and Acquisition Research Center) combed the four major trends of the merger and acquisition market in 2020, and put forward four suggestions for the future development of the merger and reorganization market, aiming at breaking the bottleneck of the development of the M & a market and promoting the long-term and healthy development of China's capital market.

As one of the main sponsors, Yin Zhongyu, head of the securities investment banking business of the Federal Reserve, pointed out that under the registration system, there are "thousand opportunities for change".

"From the data, we can see that the" seesaw "effect of IPO and M & A is obvious and incisive. When the scale of IPO fund-raising reached the highest value since 2011, the M & a market fell to the bottom." Its representation.

Chen Chenxing, executive editor in chief of the 21st century economic report, pointed out that this series of research is just under this background, based on the resource distribution and research results of the 21st Century Capital Research Institute and the securities acquisition team of the Federal Reserve in the capital market, and in the context of protecting the development of the capital market, it serves the development of A-share M & a market through think tank operation.

One trend: rationalization

21 capital fed M & A Research Center combs the data of M & a market in recent years, we can clearly see a trend: all parties in the market have become more rational about the acquisition behavior of listed companies.

The data shows that excluding the major asset acquisition transactions that have failed, the average valuation premium rate of major asset acquisition transactions of Listed Companies in 2020 is 189%, a decrease of 20% over the same period of last year, which has dropped for three consecutive years.

Among them, several M & A transactions with a premium rate of more than 10 times ended in failure, indicating that the regulatory authorities still pay close attention to the high premium acquisitions of listed companies, especially the high goodwill problems caused by high premium acquisitions are still strictly controlled by the regulators.

The rise of concept stocks in major asset acquisition also declined significantly. Compared with several or even more than a dozen trading limits triggered by early acquisitions, this irrational speculation has been greatly improved in 2020.

In 2020, the average stock price increases of Listed Companies in the first three, five and ten trading days (hereinafter referred to as "three trading periods") after disclosure of major asset acquisition information and resumption of Trading (hereinafter referred to as "three trading periods") are 2.07%, 2.41% and 4.42%, respectively, which is 61.95%, 53.47% and 20.22% lower than that in 2019, which means that investors in the secondary market are more rational in speculating on restructuring concept stocks.

In addition, in 2020, after the disclosure and resumption of major asset acquisition, the number and proportion of the rising companies in the three trading periods will also decrease significantly. Taking the first three trading days with the most obvious stimulating effect of restructuring as an example, 52 companies rose in 2020, accounting for 44.44% of the total number in that year.

This also means that less than half of the restructuring can stimulate the stock price to rise, and only 14.53% of the restructuring can make the stock price rise more than 20% in three trading days.

If the trading time is extended to 5 trading days and 10 trading days, less than half of the restructuring in 2020 will make the stock price rise.

According to the research of capital fed M & A Research Center, the irrational speculation of concept stocks in the transfer of control rights has also been greatly improved.

In 2020, 77 companies (hereinafter referred to as "control right transfer") will change their control rights and complete the transfer (hereinafter referred to as "transfer of control rights") by means of agreement transfer and agreement transfer plus voting power entrustment / signing concerted action person / subscription fixed increase. The average growth rate of the first 10, 5 and 3 trading days (excluding the suspended listed companies, the same below) is 3.13% respectively 72% and 3.11%, respectively, down 81.06%, 72% and 69% compared with 2016 (16.53%, 13.3% and 10%).

The cumulative increase of concept shares of control transfer also declined significantly. In 2020, of the 77 listed companies that completed the transfer of control rights, only 3 listed companies increased by more than 20% in the three trading days after the first disclosure of control transfer, accounting for only 4% (2 of them were suspended, and the denominator was calculated by 75 companies). This proportion decreased significantly compared with that in 2018 (14.75%) and 2019 (12.73%).

Many listed companies have "One-day Travel", such as disclosing the first day of trading limit, then falling or slightly rising on the second day, or a few of them have two consecutive days of limit, and the third day will encounter a big drop or even a limit. In 2020, there are only three listed companies that pull out more than three consecutive trading limits after the first day of disclosure of the concept shares of control transfer. Among them, the maximum number of trading limits of * ST Haiyuan is 7, but after the end of trading limits, it pulls out three limits.

The second trend: the mainstream of industrial M & A

Under the environment of strict control of cross-border M & A and "three high-tech" transactions and encouraging listed companies to carry out industrial mergers and acquisitions of assets related to high-tech industries and strategic emerging industries in line with national strategy, industrial M & A has become the mainstream.

According to the research of capital fed M & A Research Center, in 2020, excluding the major asset acquisition cases that have been declared unsuccessful, a total of 82 major asset acquisitions are under implementation and have been successfully implemented (including the approval of the IEC and the completion of transfer, the same below). From the perspective of transaction purpose, there are 57 industrial integration orders, accounting for 69.51% (73.74% in 2019), which means that major asset acquisition for the purpose of industrial integration accounts for about 70% for two consecutive years.

At the same time, cross-border M & A has entered a low period.

Among the 82 major asset acquisitions under implementation and successful implementation in 2020, the number of cross-border major asset acquisitions was 19, accounting for 23.17%, which was basically the same as that in 2019, but the transaction amount was almost cut back.

The corresponding transaction amount of the 19 cross-border major asset acquisitions was 21.155 billion yuan, down 48.75% year-on-year.

At the same time, there are 15 failed cross-border major asset acquisitions in 2020, while only 5 cross-border M & as are successful. The failure rate of cross-border major assets acquisition is as high as 75%. The reasons for the failure are as follows: the parties to the transaction do not agree on key terms, the market environment changes, and the general meeting of shareholders is not passed. In addition, some cross-border acquisition failures also come from regulatory pressure.

On the contrary, the regulatory authorities actively encourage listed companies to carry out industrial mergers and acquisitions of assets related to high-tech industries and strategic emerging industries in line with the national strategy, and give a certain degree of inclination in the approval process.

Taking Wentai technology's acquisition of Anshi semiconductor as an example, the transaction brought Wentai technology a huge amount of goodwill of 23.7 billion yuan, but there was no performance commitment. After the completion of the transaction, the debt burden of Wentai technology increased sharply, and the goodwill was more than five times of its net assets. However, this transaction only took about three months to obtain the conditional approval of the CSRC.

The reason why the transaction has won the support of all parties is that Wentai technology has successfully extended to the upstream of the industrial chain and opened up the core links of the industrial chain, so as to realize the independent control of the main components, which is of great significance for filling the technical gap of high-end chips and devices in this field in China.

The capital fed M & A Research Center also noted that in the past two years, the market-oriented M & A between listed companies (hereinafter referred to as "a eat a") is on the rise. According to statistics, there are 3, 11 and 8 new disclosure cases of "a eating a" in 2018-2020, which generally belong to industrial M & A.

Trend 3: control trading is still hot

Although the M & a market has entered a low ebb, the transaction of control rights of listed companies is still hot.

According to the statistics of capital fed M & A Research Center, 101 listed companies will complete the change of control right in 2020 after eliminating the change of control caused by passive behaviors such as transfer of state-owned assets, inheritance, reduction of secondary market, adjustment of board of directors, and dissolution of consensus action agreement.

Among them, 77 companies have changed their control rights and completed the transfer by means of agreement transfer and agreement transfer plus voting right entrustment / signing concerted action person / subscription fixed increase, with a year-on-year increase of 45.28%. The transferred private listed companies accounted for more than 90%, and state-owned assets were still the main force of acquisition.

In 2020, there will be 40 state-owned assets buyers, accounting for 51.95%, including 30 state-owned assets purchased from other places.

Although the acquisition of listed companies by state-owned assets is still hot, they are increasingly cautious and rational in the selection of target companies. First of all, we find that among the listed companies acquired by state-owned assets in 2020, most of the listed companies have certain income and profit scale, while the pure shell companies account for a small proportion.

Among the 40 state-owned assets acquisition cases, the average operating income of the listed companies involved was 3.231 billion yuan, which was 22.85% higher than that of the whole (77 orders); The average net profit was 151 million yuan, which was 184.9% higher than that of the whole (77 orders). Secondly, from the industry distribution of listed companies acquired by state-owned assets, it is almost the same traditional industry, including 19 manufacturing enterprises and 6 construction enterprises.

In addition, ST companies and loss making companies are increasingly difficult to obtain the favor of state-owned assets. In 2020, among 40 state-owned assets acquisition cases, only one ST company was successfully acquired and transferred by state-owned assets; The listed companies involved in seven acquisitions were in loss, accounting for 17.5%, and the loss amount was less than 300 million yuan.

21 capital fed M & A Research Center has found that there are a few abnormal cases of state-owned assets purchasing listed companies in 2020, which is worthy of the vigilance of state-owned assets supervision departments and market investors.

In July 2019, a subordinate investment platform of state-owned assets in a certain place obtained the control right of the listed company Rendong holdings through "zero cost" of voting entrustment, which triggered a blowout of the secondary market share price of Rendong holdings. However, after the "withdrawal" of state-owned assets, the share price of Rendong holdings continued to decline from the late November 2020, with a cumulative decline of 78.58% in less than one month, It includes 13 consecutive limits.

Similarly, the case of Zhejiang Dongyang state-owned assets participating in the transfer of Chinachem's technology control right is also worthy of vigilance. The former acquired the controlling right of Chinachem technology by means of agreement transfer, but 640 million yuan of capital was obtained from the corporate bonds issued by Dongyang Guotou in advance. In less than two months, the investment institution transferred the huge funds of the listed company out of the body, of which 250 million yuan quickly flowed into the account of Dongyang SDIC.

From the perspective of acquisition mode, in 2020, after the new regulation of refinancing, lock price fixed increase has become one of the popular acquisition methods.

In 2020, a total of 13 A-share listed companies will change their control rights by means of fixed increase. The main reason is that under the new rules of refinancing, the fixed increase price for the purpose of obtaining control right can be locked in advance with a 20% discount, which can significantly reduce the total acquisition cost. In addition, the capital is not used for cash out by the original major shareholders when acquiring the listed companies by means of fixed increase, But directly into the body of listed companies, the real realization of "fat water does not flow into the field.".

As early as may 2019, that is, before the new refinancing regulation came out, according to the prediction of the policy trend, the Federal Reserve securities assisted Changsha water industry, the purchaser of huibopu, to boldly adopt the method of "agreement transfer + voting right entrustment + fixed increase" to acquire control right, which created a precedent of embedding price lock-in fixed increase into the control right transfer of listed companies. At present, the huibopu lock price and fixed increase project has been successfully implemented, and Changsha water industry has successfully taken over huibopu.

The capital fed M & A Research Center also found that although the new regulations on refinancing have activated the market and opened the financing channels of listed companies, there is no successful case of strategic investors participating in the fixed increase of Listed Companies in the market in 2020, and the successful cases of lock up issuance of listed companies are the subscription of their controlling shareholders and actual controllers, It is not until February 2021 that Debang's lock up price and fixed increase is approved that the listed company's lock up price and fixed increase is introduced into the "ice breaking" of war investment.

It is difficult to identify the identity of strategic investors, which has a certain impact on the introduction of war investment which is really helpful to the industrial development of listed companies and the promotion of mixed reform of state-owned listed companies.

After a systematic review of the mixed reform cases of state-owned enterprises in recent years, we find that the mixed reform of state-owned assets is mostly carried out at the level of controlling shareholders of listed companies, such as Yunnan Baiyao and Chongqing department store, which introduce private capital in the form of capital increase and share expansion of controlling shareholders. However, this phenomenon does not decline in 2020 when the financing market is relatively open, but is more obvious.

For example, JAC's introduction of Volkswagen is completed through the capital increase of its controlling shareholder, JAC group; The state owned assets supervision and Administration Commission of Tianjin Municipality introduced Shanghai state-owned assets and Shenzhen private enterprises into the listed company TIANYAO shares by transferring the control right of Tianjin Pharmaceutical Group.

Trend 4: bankruptcy reorganization is not a panacea

In 2020, under the superposition of multiple adverse factors, such as domestic economic downward pressure, new crown epidemic situation, trade war, and changes in financing environment, the A-share capital market frequently experienced bankruptcy reorganization and delisting cases, both reaching a record high.

According to the research of capital fed M & A Research Center, there will be 16 A-share delisting enterprises in 2020, of which 9 will be delisted at face value. From the perspective of the main attributes of delisting companies, these 16 delisted listed companies are all private companies, and the number of delisting is reaching a new high, which makes M & A delisting more valuable.

On the other side of the acceleration of the "survival of the fittest" in the capital market, more and more listed companies "format" to survive through bankruptcy reorganization. In 2020, the number of bankruptcy reorganization will reach a new record after 2019. A total of 32 listed companies have newly disclosed relevant announcements on bankruptcy reorganization of companies and controlling shareholders, of which 17 are self restructuring of listed companies, 15 are the controlling shareholder level bankruptcy reorganization.

In 2020, the securities investment bank team of the Federal Reserve deeply participated in the bankruptcy reorganization and IPO recovery project of the listed company * St* After overcoming the adverse impact of the new crown epidemic situation, St. deo has only 36 days from accepting the reorganization application to terminating the reorganization procedure, which is one of the shortest time-consuming reorganization cases in China.

One of the key operations is to ensure that the draft reorganization plan can be voted through at the first creditors' meeting by pre selecting the administrator in advance to carry out the pre voting work on the draft reorganization plan* St. d'ao finally came back to life through bankruptcy and reorganization. The debt of 500 million yuan was resolved smoothly. The production and operation of small household appliances, the main business, were restored in an orderly manner. More than 1100 employees were properly resettled, and the interests of more than 24300 small and medium shareholders were effectively protected.

Although bankruptcy reorganization has the advantage of "rebirth" of troubled companies, with the promotion of the registration system, the shell value of listed companies is no longer sought after, and the success of bankruptcy reorganization of listed companies is becoming more and more difficult. The main reason is that it is more and more difficult to find investors who have the strength and willingness to restructure.

The capital fed M & A Research Center reviewed the bankruptcy and reorganization cases of listed companies from 2007 to now, and found that before 2020, most of the listed companies could determine the reorganization investors in a short time without disclosing the announcement of public recruitment of restructuring investors.

Since 2020, public recruitment has been used by more and more listed companies, such as * ST Zhongnan, * ST Yinyi, * ST Lifan, * ST Anton, * ST Zhongtai, etc., have disclosed the announcement of public recruitment and reorganization of investors.

Even so, some listed companies encountered the embarrassment of not intending to sign up for investors during the first recruitment. For example, * ST Zhongtai did not receive any registration materials from investors within the deadline of the recruitment announcement.

In addition, we also found that before 2019, the restructuring investors of listed companies were mainly state-owned assets, the former major shareholders of listed companies and institutions with relevant industrial background. However, since 2019, more and more investment institutions without industrial background have emerged in the bankruptcy and reorganization of listed companies.

For example, Longhai investment, a restructuring investor of Tianhai defense, and Jiaxing Zihe Jinxin equity investment partnership (limited partnership) of Shanghai Dingguo and * ST Yinyi restructuring investor, Shenzhen Qianhai Shenshang Financial Holding Group Co., Ltd.

Among them, Jiaxing Zihe Jinxin equity investment partnership (limited partnership), as the restructuring investor of * ST Yinyi, has default and delay in the payment of restructuring investment. There are still 1.7 billion yuan of restructuring investment in total of 3.2 billion yuan, and the payment period is also extended to March 31, 2021.

This also reflects from the side that it is more difficult for listed companies to find suitable and powerful restructuring investors. If they have to lower their standards, the overall quality of investors will continue to decline, which may directly lead to the failure of restructuring.

What's more, even if the bankruptcy reorganization process is successful, if the reorganization investors do not make the listed company's operating conditions significantly improved, they will still face delisting risk soon.

For example, although st Pang completed bankruptcy reorganization on December 31, 2019, its closing price was only 0.94 yuan / share on January 5, 2021, and the average stock price in the first 20 trading days was only 1.02 yuan / share, which was close to the risk of delisting at face value again. On January 6, its controlling shareholders quickly put forward a plan to increase their holdings by 500-1 billion yuan to stabilize the stock price.

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