China M&A leaves offshore investors in the lurch

Guotai Haitong Securities Co

10/10/2024 05:49

(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own.)
    By Robyn Mak
       HONG KONG, Oct 10 (Reuters Breakingviews) - The merger
of brokerage firms Guotai and Haitong will massively dilute the
former's Hong Kong shareholders. Blame the stubborn discount the
city's stocks trade at to onshore equivalents. Beijing's
consolidation push will leave more global backers in a similar
spot.       
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    CONTEXT NEWS
    Chinese brokerages Guotai Junan Securities and Haitong
Securities on Oct. 9 announced the terms of their proposed
merger, which they had initially unveiled on Sept. 5. 
    Each Haitong share will be exchanged for 0.62 Guotai Junan
shares. The exchange ratio will apply to both Hong Kong-listed H
shares and mainland-listed A shares.
    Separately, the combined entity will raise up to 10 billion
yuan ($1.42 billion) by issuing A shares to its controlling
shareholder, Shanghai State-owned Assets Management.
   The combined entity, with 1.6 trillion yuan in total assets,
will overtake Citic Securities as China's largest brokerage.

 (Editing by Antony Currie and Aditya Srivastav)
 ((For previous columns by the author, Reuters customers can
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robyn.mak@thomsonreuters.com))