Hongyuan buyout sees shares soar
Print Edition
HONGYUAN Securities saw its share price surge by the daily limit yesterday after it agreed to be acquired by a sister company in the largest ever buyout in China’s brokerage industry.
The stock rose 10 percent to 8.93 yuan (US$1.44) in Shenzhen after trading resumed from a suspension that began on October 30.
In a filing to the Shenzhen Stock Exchange on Friday, Hongyuan said it had agreed to be bought out by Shenyin & Wanguo Securities in a deal worth 39.6 billion yuan.
Both Hongyuan and Shenyin are controlled by Central Huijin Investment Ltd, the domestic investment arm of China’s sovereign-wealth fund.
Shenyin will issue 2.049 shares for each Hongyuan share, and on completion of the deal plans to assume the target company’s listing in Shenzhen, the filing said.
The deal is expected to create China’s third-largest broker, after CITIC Securities and Haitong Securities.
“The new entity will be an investment holding company with diversified businesses to boost profitability,” Hongyuan chairman Feng Rong told a media briefing on Friday.
The new company will be registered in the Xinjiang Uygur Autonomous Region, where Hongyuan is based, but with a subsidiary in Shanghai to manage its brokerage business.
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