Economic Watch: Chinese capital market M&A gains momentum amid tailwind

This panoramic aerial photo taken on Jan. 10, 2023 shows a view of the Lujiazui area of ​​the Pilot Free Trade Zone of China (Shanghai) in east China’s Shanghai. (Xinhua/Fang Zhe)

BEIJING, Sept. 29 (Xinhua) — Mergers and acquisitions (M&A) among Chinese listed firms have accelerated in recent months due to favorable policies to strengthen companies’ competitiveness, contributing to the high-quality development of the country’s capital market.

The number of such M&A cases has seen a significant increase compared to the same period last year, with 46 major asset restructuring deals disclosed between May and mid-September, according to information made public by companies listed on the A- share.

“Until this year, mergers and acquisitions have been particularly active among technology firms, state-owned enterprises (SOEs) and securities companies, with market forces playing a bigger role in deals,” said Tian Lihui, head of the Institute. of Finance and Development. at Nankai University.

A telling example is the acquisition of APT Medical, a manufacturer and supplier listed on the Science and Technology Innovation Board (STAR) market, by Mindray, an industry leader in the development and production of medical equipment.

The transaction was announced in January and completed in April. By combining APT Medical’s advantages in electrophysiology and vascular interventional medical devices and Mindray’s R&D capability and overseas marketing experience, the deal enhanced the competitiveness of both companies.

The half-yearly financial reports show that the net profits of Mindray and APT Medical increased by 17.37 percent and 33.09 percent respectively in the first six months of this year.

In June, the China Securities Regulatory Commission (CSRC) unveiled a series of measures to further reform the STAR market and pledged greater efforts to support M&A activities among listed companies.

The CSRC said it will support industrial chain integration among companies and make M&A institutions more inclusive, supporting companies to acquire high-quality technology firms that are not yet profitable.

Driven by such measures, the transaction values ​​of M&A transactions of companies on the STAR market exceeded 3 billion yuan (about 427.34 million US dollars) in the first half of the year, doubling that of the same period of the previous year, data from the Shanghai Stock Exchange showed.

Technology companies can accelerate innovation and industrial modernization through mergers and acquisitions, Tian said.

In addition, both central and local SOEs also use mergers and acquisitions to drive industrial specialization and integration, enhancing industrial synergy with business partners.

In September, two listed subsidiaries of China State Shipbuilding Corporation announced a merger plan, which is expected to be one of the largest A-share market M&A deals by market value in recent years .

The merger is designed to propel the new entity into a global leader in shipbuilding, characterized by comprehensive research and innovation capabilities, along with a rich product structure and production lines, according to a research note by Huatai Securities.

Securities firms have also seen major M&A deals this year, with Guotai Junan Securities and Haitong Securities planning to merge through a share swap.

In recent years, the CSRC has continuously promoted market-oriented reform in listed company mergers and acquisitions. This was achieved through a number of measures, including the simplification of approval procedures and the optimization of regulatory requirements.

The effort was stepped up this year. Against the background of global industrial transformation and China’s accelerated economic structural modernization, it is “urgent” for companies to capitalize on the essential role of mergers and acquisitions in promoting industrial integration as well as improving industry quality and efficiency, said CSRC Chairman Wu Qing. at a news conference on Tuesday. .

On the same day, the CSRC launched new measures to support Chinese listed companies in conducting M&A activities, promising to help channel more resources to new quality productive forces, encourage companies to strengthen industrial consolidation and and raise investment value by improving market value management. .

Tian anticipated that the regulators’ latest policies will further invigorate China’s M&A market and drive the transformation and modernization of listed companies.

“The trend of mergers and acquisitions is expected to continue and play an important role in increasing the competitiveness of companies, especially in the areas related to state-owned enterprise reform, sci-tech innovation and financial services integration,” he said. â– 

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