Guolian Securities (601456.SH) has made new progress in acquiring Minsheng Securities, and the company's A-shares will resume trading starting from the opening of the market on May 15th (Wednesday).

On the evening of May 14th, Guolian Securities issued an announcement stating that it plans to purchase a 100.00% stake in Minsheng Securities held by Guolian Group, Fengquan Yu, and 46 other transaction counterparts through the issuance of A-shares, and to raise supporting funds.

The transaction will be paid for by issuing A-shares, with an issue price of 11.31 yuan per share. This issue price is 8.13% higher than the closing price of 10.46 yuan per share on the last trading day before the suspension (April 25th).

According to the announcement, the audit and evaluation work for this transaction has not been completed, and the valuation and pricing of the target assets have not yet been determined. The transaction is expected to constitute a significant asset restructuring for the listed company.

It is worth noting that, as of the date of the preliminary plan signing, Bai Lu Group holds a total of 168 million shares (1.48%) in Minsheng Securities, of which 80 million shares are pledged; Pan-sea Holdings holds a total of 83,967,330 shares (0.74%) in Minsheng Securities, with judicial freezing, of which 65,359,478 shares are pledged.

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"To resolve the above-mentioned share pledge and freezing issues, Bai Lu Group and Pan-sea Holdings have promised to lift the pledge and freezing status of the target company's shares they hold as soon as possible. If the transaction counterparts fail to resolve the above issues in a timely manner, it may lead to changes in the scope of the target assets," said Guolian Securities.

On the evening of the 14th, several listed companies announced that their subsidiaries plan to sell their shares in Minsheng Securities to Guolian Securities.

Among them, Sofiya (002572.SZ) announced that its wholly-owned subsidiary, Guangzhou Sofiya Investment Co., Ltd. (hereinafter referred to as "Sofiya Investment"), plans to sell 294 million shares of Minsheng Securities to Guolian Securities and subscribe to the newly issued A-shares of Guolian Securities with the target assets. On May 14, 2024, Sofiya Investment has signed the "Framework Agreement for the Issuance of Shares to Purchase Assets" with Guolian Securities.

Beijing Lier (002392.SZ) also announced that its wholly-owned subsidiary, Luoyang Lier Refractory Materials Co., Ltd., plans to sell approximately 147 million shares of Minsheng Securities to Guolian Securities and subscribe to the newly issued A-shares of Guolian Securities with the target assets.

In addition to issuing shares to purchase assets, Guolian Securities will also raise supporting funds.Guotai Junan Securities plans to issue shares to no more than 35 specific investors to raise supplementary funds, with the total amount of supplementary funds not exceeding 2 billion yuan, and the number of A-share shares issued not exceeding 250 million shares. After deducting the fees of intermediary institutions and transaction taxes and fees, the funds raised from this transaction are intended to be used for the development of Guotai Junan Securities' business.

According to the announcement, the pricing benchmark day for the issuance of shares to raise supplementary funds in this transaction is the first day of the issuance period, and the issuance price is not lower than 80% of the average transaction price of the stock in the 20 trading days before the pricing benchmark day for the supplementary funds, and is not lower than the net asset value per share attributable to the ordinary shareholders of the parent company in the most recent audited period before this issuance.

Currently, the differentiation and integration of the securities industry are accelerating, and the competition among industry participants is becoming increasingly fierce, with the industry concentration further increasing. At the same time, the internationalization and globalization of the securities industry are improving, with foreign securities firms entering the Chinese market and Chinese securities firms also vigorously expanding their overseas business, presenting both opportunities and challenges for the securities industry. Against the backdrop of securities companies transitioning from traditional intermediary businesses to capital intermediary businesses, the industry concentration is expected to continue to increase rapidly, with market share continuing to concentrate on large securities firms with leading financial and resource strength.

"Under the new circumstances, listed companies urgently need to enhance their capital strength, attract high-end talent, expand business scale, and enrich business resources to achieve a leap in overall strength," said Guotai Junan Securities.

As of now, Guotai Junan Group directly holds 19.21% of the shares of Guotai Junan Securities and indirectly controls 29.40% of the shares through its controlled enterprises, including Guotai Trust, Guotai Electric Power, Wuxi Minsheng Investment, Yimian Textile, and Huaguan Energy, for a total control of 48.60% of the shares of Guotai Junan Securities, making it the controlling shareholder. The actual controller of Guotai Junan Securities is the Wuxi Municipal State-owned Assets Supervision and Administration Commission, which directly and indirectly holds 93.33% of the equity of Guotai Junan Group.

The main sources of revenue for Guotai Junan Securities are from the brokerage and wealth management business division, securities investment business division, investment banking business division, asset management and investment business division, and credit trading business division. Among them, from 2021 to 2023, the income realized by the brokerage and wealth management business division accounted for 28.57%, 29.61%, and 25.33% of the total revenue, respectively; the income realized by the securities investment business division accounted for 27.61%, 24.10%, and 22.84% of the total revenue, respectively. This means that the brokerage and wealth management business and the securities investment business are the main contributors to the revenue of Guotai Junan Securities.

The main businesses of Minsheng Securities include investment banking, wealth management, asset management, and investment trading. In 2023, Minsheng Securities achieved a revenue of 3.799 billion yuan, a year-on-year increase of 50%; the net profit was 683 million yuan, a year-on-year increase of 2.22 times.

At present, investment banking is the flagship business of Minsheng Securities. According to Wind data statistics, Minsheng Securities had 18 IPO projects approved in 2023, ranking third in the industry; 20 companies were issued and listed, ranking fourth in the industry; and the income from underwriting and sponsorship fees ranked fourth in the industry.

In terms of regional coverage, Minsheng Securities' branch network focuses on the Henan area, while Guotai Junan Securities mainly has a relatively high market share in Wuxi and the southern Jiangsu region.

"After the integration of the businesses of the two securities firms in the future, it will further strengthen their respective business and regional advantages and achieve strategic synergy," said Guotai Junan Securities.