China International Capital Corporation (CICC) has unveiled details of its merger with two smaller state-owned rivals that will create an entity with combined assets of more than 900 billion yuan (US$127.8 billion).
The Beijing-based investment bank will issue some 3.1 billion new A shares at 36.91 yuan to acquire all outstanding shares in Dongxing Securities and Cinda Securities to facilitate the merger, according to a filing to the Hong Kong stock exchange on Wednesday.
Shares of CICC rose 3.7 per cent to 36.18 yuan after trading resumed on Thursday. Trading in the three companies was suspended on November 19 pending the announcement.
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The merger would “significantly strengthen support for national strategies and the real economy”, CICC said, adding that the merger also reflected a trend in China’s securities industry where firms were “optimising resource allocation through integration”.
CICC operates more than 200 branches and offices across the globe. Photo: qq.com alt=CICC operates more than 200 branches and offices across the globe. Photo: qq.com>
The transaction will create China’s fourth-largest investment bank with assets of about 930 billion yuan, and follows last year’s combination of Guotai Junan Securities and Haitong Securities, which created an industry giant with 1.68 trillion yuan in assets.
The consolidations align with Beijing’s push to build global financial champions.
In a speech this month to the Securities Association of China, Wu Qing, the chairman of the China Securities Regulatory Commission, said brokerages should “redouble efforts to fulfil the goal set by Beijing to build China into a global financial powerhouse” while supporting the country’s technology self-reliance strategy.
Under the agreement, each Dongxing A-share will be converted into 0.4373 CICC shares, while each Cinda share will be exchanged for 0.5188 CICC shares. CICC, Dongxing and Cinda are controlled by Central Huijin Investment, a unit of China’s sovereign wealth fund.
Cinda shareholders will receive 19.15 yuan per share, matching the 20-day average price and implying no premium, while Dongxing shareholders are being offered a 26 per cent premium above the 20-day average of 12.81 yuan before the merger announcement.
Qualified CICC dissenting shareholders can sell their A shares at 34.80 yuan each and H shares at HK$18.86 each.
