Guolian, Sinolink Securities Firms Terminate $13 Billion Merger Deal
What’s new: Shanghai and Hong Kong-listed Guolian Securities Co. Ltd. and Shanghai-listed Sinolink Securities Co. Ltd. called off a proposed tie-up that could have created a 93 billion yuan ($13.8 billion) industry behemoth less than a month after the merger was announced Sept. 20.
State-owned Guolian, which is ultimately owned by the Wuxi government, and Sinolink said the two companies failed to agree on some of the core terms of the deal and decided to terminate the combination.
The proposed deal was unprecedented and complex, involving the purchase of some equity first and a share swap, a person close to the deal told Caixin. After intermediary agencies got involved in due diligence, the companies didn’t see how to proceed in a quick and efficient way, the person said.
Shares of Guolian and Sinolink will resume trading Tuesday; they were suspending Sept. 21. Guolian had a market cap of 46.7 billion yuan before the suspension. Sinolink’s market value was 46.2 billion yuan.
The background: Under the original deal, Guolian was to buy a 7.8% stake in Sinolink from its privately owned controlling shareholder and pay for the remainder through an A-share swap, according to filings released by the two companies.
The deal would have propelled the merged company into the top 10 brokerages in China. Guolian ranks 55th among 98 brokerages tracked (link in Chinese) by the government-backed Securities Association of China (SAC), with assets of 27.3 billion yuan ($4 billion), while Sinolink is 33rd with 46.9 billion yuan.
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