A shareholder tender announcement has once again brought the struggle for control of Kelin Electric into the spotlight.

On the evening of May 13th, Kelin Electric (603050.SH) announced that it had recently received a summary of the tender offer report from Qingdao Hisense Network Energy Co., Ltd. (hereinafter referred to as "Hisense Network Energy"), which intends to issue a partial tender offer to all shareholders of Kelin Electric except itself for its circulating shares. The number of shares to be tendered is approximately 45.418 million, accounting for 20% of the shares. After the completion of this tender, Hisense Network Energy's shareholding ratio will approach 35%, making it the controlling shareholder.

Since March of this year, three shareholders have been contending for the control of Kelin Electric through a series of overt and covert battles. Initially, Hisense Network Energy made a "raid" acquisition, while Chairman Zhang Chengsuo of Kelin Electric and his concert parties, as well as Shijiazhuang State-owned Investment Group, have been "defending" through various means. Industry insiders believe that previously, both sides had been in a delicate balance. However, with Hisense Network Energy's tender offer, the struggle for control of Kelin Electric has entered a critical phase. If the tender offer is successful, the company's control may change.

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On May 15th, First Financial tried to call the company's secretary and securities representative multiple times, but no one answered. Hisense Network Energy stated to the media on the 14th that this tender offer for Kelin Electric's shares is legal and compliant, and is also reasonable under the current equity structure.

"Hisense Group" launched a surprise tender offer

According to the latest announcement, Hisense Network Energy will conduct a partial tender offer to all shareholders of Kelin Electric except itself, planning to acquire approximately 45.418 million shares, which accounts for 20% of Kelin Electric's total share capital, with a tender offer price of 33 yuan per share. Based on this calculation, if all tenders are completed, Hisense Network Energy will spend nearly 1.5 billion yuan.

Hisense Network Energy's move is aimed at obtaining control of Kelin Electric. Before initiating the tender offer, Hisense Network Energy already held 14.94% of Kelin Electric's equity and a total of 24.51% of the voting rights. If this tender is completed, its direct shareholding ratio will approach 35%, and the voting rights ratio will approach 45%.

According to the "Administrative Measures for the Acquisition of Listed Companies," an investor who can actually control more than 30% of the voting rights of a listed company's shares is deemed to have control over the listed company. This also means that if the tender offer takes effect, Hisense Network Energy will gain control of Kelin Electric.

Whether this tender offer will take effect is still subject to confirmation after thirty natural days. The announcement shows that only if the number of Kelin Electric shares tendered and temporarily held by the Shanghai branch of the China Securities Depository and Clearing Corporation during the tender period is not less than 34.29 million shares (accounting for 15.10% of the total number of Kelin Electric shares), can the tender take effect. Otherwise, the tender offer will not take effect from the beginning, and all pre-accepted shares will not be accepted by the offeror.

This also means that within thirty natural days, Hisense Network Energy needs to acquire at least 34.29 million shares from other shareholders to successfully complete the tender offer. On the tender initiation date (May 13th), the share price of Kelin Electric was 28.69 yuan per share, and Hisense Network Energy's price of 33 yuan per share is about 15% higher, which should be attractive to shareholders.According to disclosures, from 2021 to 2023, Hisense Netable's net profits were 31.36 million yuan, 62.52 million yuan, and 72.82 million yuan, respectively. As per the announcement, the funds required for its tender offer acquisition stem from the company's own capital.

Competition Among Multiple Forces

This tender offer acquisition is just one part of the struggle for control of Kelin Electric. Since March of this year, the company has been embroiled in a tug-of-war over control, with three shareholder factions vying against each other.

The beginning traces back to a surprise move by the "Hisense faction" in March. On March 18th, Kelin Electric announced that the company's Vice Chairman Li Yanru and Director and President Qu Guowang planned to transfer 3.19% of the total share capital of the listed company to Hisense Netable, and to entrust the voting rights of the remaining shares they held (accounting for 9.57% of the total share capital) to Hisense Netable for exercise.

At the same time, Hisense Netable has been "lurking" in the secondary market to increase its holdings in Kelin Electric. Multiple announcements show that in March 2024, Hisense Netable repeatedly increased its holdings through centralized bidding. As of April 2nd, Hisense Netable's shareholding reached 31.67 million shares, with a shareholding ratio of 13.95%, and the voting rights ratio reached 23.52%, far exceeding the 11.07% voting rights of the previous largest shareholder and Chairman Zhang Chengsuo.

Since then, Hisense Netable continued to increase its holdings. The latest announcement shows that Hisense Netable's direct shareholding ratio has risen to 14.94% (with 5.10% of the shares not yet transferred), and the voting rights held are 24.51%.

Faced with the relentless pressure from Hisense Netable, the major shareholders of Kelin Electric also quickly united with other shareholders to launch a "defense war" for control. Starting in April, the major shareholders of Kelin Electric, on one hand, united with the remaining shareholders to establish a relationship of concerted action; on the other hand, they pinned their hopes on the major shareholder with whom they had a close cooperation, Shijiazhuang State-owned Capital Investment and Operation Group Co., Ltd. (hereinafter referred to as "Shijiazhuang State Investment") to increase its holdings.

According to the disclosures, on April 1st, Zhang Chengsuo, Qiu Shiyong, Dong Caihong, and Wang Yong signed an agreement together, forming a concerted action relationship with a combined shareholding ratio of 17.31%.

Shijiazhuang State Investment also significantly increased its holdings in the open market. After increasing its holdings by 111,700 shares on March 25th to reach the 5% disclosure threshold, Shijiazhuang State Investment continued to increase its holdings, reaching a shareholding ratio of 6%. On April 25th, Shijiazhuang State Investment once again disclosed its holdings, announcing that its shareholding ratio had reached 10%.

Zhang Chengsuo and the concerted action persons, along with the "alliance" with Shijiazhuang State Investment, have a combined shareholding ratio exceeding 27%. This is higher than the voting rights of Hisense Netable at that time, forming a balance of power. Many industry insiders believe that this may also be the reason why Hisense Netable chose to "play a big move" by conducting a tender offer acquisition to "break the deadlock."In this escalating battle for control, both sides have invested far more "real money" than expected due to the continuous rise in stock prices. During this period, the share price of Kelin Electric soared from 14.16 yuan per share on February 6th of this year to 31.56 yuan per share on May 14th, with a cumulative increase of over 120%.

If calculated based on the approximate average price, Hisense Netenergy has currently invested more than 800 million yuan for this, and the subsequent tender offer may require an additional investment of about 1.5 billion yuan; while Shijiazhuang State-owned Investment has successively invested more than 200 million yuan.

Where does the root lie?

According to public information, Kelin Electric was established in 2000, mainly providing smart power system solutions for the power industry, public utilities, and large industry customers, and was listed on the A-share main board in 2017.

The prospectus shows that after the listing, the equity structure of Kelin Electric was relatively dispersed. The largest shareholder, Zhang Chengsuo, held only 16.2 million shares, accounting for 12.15% of the shares. The others holding more than 5% of the shares were Jiahao Jiuding, Li Yanru, and Qu Guowang, with shareholding ratios of 8.1%, 7.93%, and 6.59%, respectively.

Before the listing in 2015, five shareholders, Zhang Chengsuo, Li Yanru, Qu Guowang, Qiu Shiyong, and Dong Caihong, signed a unanimous action agreement to jointly exercise actual control. At that time, the five together held 47.72% of Kelin Electric's shares, firmly controlling the company. After the listing, the shareholding ratio of these five people was diluted, but they still held a total of 32.04%, and the control was relatively stable.

With the dissolution of the unanimous action relationship, the control of Kelin Electric began to show unstable factors. In April 2022, Zhang Chengsuo, Li Yanru, Qu Guowang, and the other two did not renew the unanimous action agreement that had been maintained for more than ten years. At this time, Zhang Chengsuo was still the largest shareholder and the actual controller, with a shareholding ratio of 11.067%. However, there was no significant gap with the second-largest shareholder, Li Yanru (with a shareholding ratio of 6.45%), and the third-largest shareholder, Qu Guowang (with a shareholding ratio of 6.32%).

Subsequently, more contradictions between shareholders emerged. On September 9th last year, Kelin Electric announced that in view of the preparation of the board of directors and the board of supervisors, to ensure the continuity of their work, the fourth board of directors and the board of supervisors would be postponed. Industry analysis believes that the success of this change of term is crucial for the stability of the control of Kelin Electric with a dispersed shareholding. However, judging from the postponement result, both sides obviously failed to reach an agreement. In March of this year, Li Yanru and Qu Guowang planned to transfer 3.19% of the total share capital of the listed company to Hisense Netenergy.

According to market news, there are contradictions between the company's largest shareholder and the second and third shareholders on several issues, including the selection of board members. The reporter sought confirmation from Kelin Electric on this information, and there has been no response as of the time of publication.