On October 27, Jialinjie, and Keda and Jizhi respectively announced the termination of the relevant M&A transactions. Data show that as of October 27 this year, 64 M&A transactions initiated by A-share listed companies failed. According to the relevant announcement, there are many reasons for the listed company to terminate the merger, including the target company's veto transaction, asset valuation and pricing plan, and ultimately failed to reach an agreement.

According to industry insiders, the M&A market has cooled down since last year, and the biggest contradiction between the two parties is that the valuation, pricing and performance commitments of the transaction target cannot be agreed. At the same time, stricter supervision and cautious markets all reflect that the M&A market is further rational.

Many companies terminate mergers and acquisitions

On the evening of October 26, Jialinjie, and Keda, Jizhi shares issued separate announcements to announce the termination of the merger. Among them, Jialinjie, and Keda originally planned to seek new profit growth points through cross-border restructuring; Jizhi shares originally planned to expand the scale through mergers and acquisitions.

According to the announcement of Jialinjie, the company intends to terminate the acquisition of Beijing Deqingyuan Agricultural Technology Co., Ltd. (“Deqingyuan”). In April this year, Jia Linjie announced the announcement of major asset progress, announcing that it is planning a major asset restructuring with Deqingyuan, and said that the two parties have reached preliminary intentions. The company originally planned to acquire 50.47% of the equity of Deqingyuan with a total of 1.235 billion yuan in cash and increase the capital, and take it into the planned eco-health industry chain, and as an industrial platform to further expand upstream and downstream in the future. . Deqingyuan terminated its listing in the New Third Board market in August this year.

Jialinjie is a research and development, design, production and sales company of high-end outdoor sports functional fabrics in Shanghai. In order to resist the risks of rising raw materials and labor costs and increasing market competition, the company needs to seek other industry development opportunities, create new profit growth points, and plan to invest in Deqingyuan.

And Keda originally planned to acquire 100% equity of Baosheng Automation for 618 million yuan, and raised matching funds not exceeding 172 million yuan. The company is a major domestic industrial precision cleaning equipment manufacturer, covering three major sectors of precision cleaning, water treatment and electroplating. It plans to enter the panel assembly equipment field through the acquisition of Baosheng Automation. On the evening of October 26, Xinwangda, as a shareholder of Baosheng Automation, announced the termination of the above transaction.

It is understood that the main products of Jizhi are fully automatic balancing machines and testing machines. The company's business scale is small and the product lines are relatively insufficient. The company's proposed Shanghai Xinke Testing Machine Co., Ltd. was once a representative enterprise in China's testing machine and balancing machine industry. It has the technical foundation of various testing machines and balancing machines, and has high brand awareness and intangible assets in the balanced industry. value. The company originally planned to further enhance the market competitiveness and market share of the company's products through the acquisition of Shanghai Xinke Testing Machine Co., Ltd., and create new profit growth points.

Data show that as of October 27 this year, a total of 64 A-share listed companies initiated merger and acquisition transactions failed, involving companies including Taihe Group, Guangzhao Nonferrous, Yili Energy Saving, Quantum Hi-Tech and so on.

Various reasons

According to the relevant announcements disclosed by the listed company, the reasons for the termination of the merger include the failure of the target company to veto the transaction, the valuation of the assets and the pricing plan, the market environment has changed, and the relevant transactions have no management measures.

For the target company to veto the transaction, take Jialinjie and Jizhi shares as examples. Jia Linjie announced that the reason for the termination of this major asset restructuring was that Deqingyuan held the 4th Extraordinary General Meeting of Shareholders held on October 25th, deliberating and voting the relevant proposals of this transaction. Jizhi shares announced on the evening of October 26 that the company received relevant notice on October 25, and Shanghai Xinke Testing Machine Co., Ltd. is implementing reforms such as suspension of production and closing, and will no longer implement the 100% equity transfer plan. In view of this, the company will not be able to continue to participate in the bidding for the 100% equity of Shanghai Sink Test Machine Co., Ltd.

In the event that the asset valuation and pricing plan failed to reach an agreement, according to the announcement of Kodak, the two parties had not reached an agreement on the valuation and pricing plan of Baosheng Automation Assets after several rounds of consultations. After the friendly negotiation between the two parties, the joint decision to terminate this major asset restructuring.

In terms of changes in the market environment, Zhongzhou Holdings announced on the evening of April 6 that it announced the decision to terminate the acquisition of a 23.2% stake in Huanan City. The company's shares will resume trading on April 7, 2017. Zhongzhou Holdings said that due to the recent changes in the domestic securities market environment, policies and regulations, the company, the counterparty and other relevant parties believe that the conditions for further promotion of this major asset purchase are no longer available. After careful study by all parties involved in the purchase of major assets, it is now decided by consensus to terminate this major asset restructuring.

On the evening of May 31, Yinjiang announced that the company originally planned to purchase 39.12% equity of Zhitu Technology and 70% equity of Hangzhou Qingpu by issuing shares and paying cash, and has been approved by the CSRC. However, due to the fact that the national share transfer system has not established a non-transactional business process and specific implementation management methods, it has been unable to complete the equity transfer procedures of Zhitu Technology, resulting in the automatic expiration of the reorganization approval. The company decided to terminate the major asset restructuring and change to Complete the above investment in cash.

M&A market tends to be rational

According to industry insiders, the M&A market has cooled down since last year. On the one hand, the regulatory authorities frequently send inquiries to the sources of funds and reasonable valuation of M&A transactions, and the supervision is becoming more and more strict. On the other hand, after the disclosure of related plans of listed companies, the stock price rarely has a radical performance, further reflecting The M&A market has cooled down.

The regulatory authorities frequently sent inquiries to the valuation of the assets under the listed company's M&A transactions, the valuation of the transaction and the performance commitment. Taking Jialinjie as an example, public data shows that in 2015, 2016 and January-June 2017, Deqingyuan’s operating income was 547 million yuan, 587 million yuan and 353 million yuan respectively; Deqingyuan 2015, In 2016, the combined net profit was 10.79 million yuan and 3.3 million yuan respectively. The plan shows that in 2017-2020, Deqingyuan will realize a cumulative commitment of net profit of RMB 650 million.

Deqingyuan’s “high performance commitment” triggered the attention of the Shenzhen Stock Exchange and asked for the rationality and feasibility of its supplementary disclosure performance commitment in the inquiry letter.

In response to this termination of the Kodak M&A transaction, the Shenzhen Stock Exchange has inquired about the “high valuation” of Baosheng Automation. According to the inquiry letter, as of March 31, 2017, Baosheng Automation's unaudited net assets were 77.865 million yuan, with an estimated value of 618 million yuan, an increase of 693.68% over the book value of net assets. After the completion of this transaction, a large amount of goodwill will be confirmed. Please explain the specific reasons and reasonableness of the evaluation of the target value of this transaction.

In terms of market performance, the listed companies that terminated the merger on October 27 mentioned above had little aggressive performance after the merger and acquisition related plans were disclosed. Due to the planning of major events, Jialinjie suspends trading since the market opened on February 28 this year. After the resumption of trading on September 27, the company's share price closed at 8.54 yuan/share, and has continued to show a downward trend since then. After the announcement of the company's termination of mergers and acquisitions, on October 27, the company closed at 7.08 yuan / share, a slight increase of 3.81%.