Goodbye, Haitong; Guotai Junan, see you next week

As one of the longest-established securities firms in mainland China, Guotai Junan Securities and Haitong Securities have reached a "fateful conclusion."

On the evening of February 7, Haitong Securities announced that the company had submitted an application to the Shanghai Stock Exchange for the voluntary termination of the listing of its A-shares on February 7, 2025.

Thus, Haitong Securities, established in 1988, bids farewell to the A-share market.

On the same day, the other party in this merger, Guotai Junan Securities, also announced that, following an application to the Shanghai Stock Exchange, its A-shares would resume trading on February 10, 2025.

As the main entity for the upcoming absorption merger, Guotai Junan, which started in 1992, is about to embark on a new journey.

Completing the Absorption Merger Process in Five Months

Counting the days, this is the largest merger case in the history of financial institutions in Shanghai. From the suspension announcement by Guotai Junan and Haitong Securities on September 5, 2024, to the announcements of resumption of trading and delisting by the two brokerages on February 7, 2025, it took just over five months, a remarkably swift progress.

During this period, on October 9, 2024, the two companies released a merger reorganization plan and related announcements.

On November 21, 2024, the two companies disclosed the merger reorganization draft, further revealing transaction details.

On December 13, 2024, the shareholders' meetings of both companies approved the merger reorganization transaction plan.

On December 23, 2024, the applications related to the major asset restructuring of both companies were accepted. The Shanghai Stock Exchange verified the application documents according to relevant regulations, deemed the documents complete and in legal form, and decided to accept and review them according to law.

On the same day, the China Securities Regulatory Commission accepted the administrative license applications related to this transaction, including the merger of Guotai Junan and Haitong Securities, the dissolution of Haitong Securities, the change of major shareholders and actual controllers of HaiFuTong Fund Management Co., Ltd., the change of major shareholders of Fortune Fund Management Co., Ltd., and the change of major shareholders and actual controllers of Haitong Futures Co., Ltd.

Also in December, the Hong Kong Securities and Futures Commission approved Guotai Junan as the surviving company, becoming the major shareholder of Haitong Securities' related overseas subsidiaries after this merger, in accordance with Section 132 of the Hong Kong Securities and Futures Ordinance.

Subsequently, on January 9, 2025, the Shanghai Stock Exchange's M&A Review Committee approved this merger, making it the first M&A restructuring project to pass in 2025.

On January 17, 2025, the China Securities Regulatory Commission issued a reply regarding the approval of Guotai Junan Securities Co., Ltd. for the absorption merger of Haitong Securities Co., Ltd. and the registration of supporting funds, as well as the approval of changes in major shareholders and actual controllers for HaiFuTong Fund Management Co., Ltd., Fortune Fund Management Co., Ltd., and Haitong Futures Co., Ltd Various complex procedures were completed within more than 5 months.

No shareholders exercised their right to request acquisition

Additionally, the announcement on February 7 also indicated that during this round of merger, no dissenting shareholders applied to exercise their right to request acquisition.

This allowed the merger of the two companies to skip a potential "interlude" phase.

Previous announcements showed that during the merger process, Guotai Junan Securities and Haitong Securities arranged for acquisition request rights and cash options for the dissenting shares held by dissenting shareholders.

Shanghai International Group acted as the provider of the acquisition request rights for dissenting shareholders of Guotai Junan. It allowed dissenting shareholders of Guotai Junan A shares to sell their dissenting shares to the International Group at a price of 14.86 yuan/share.

And Taiping Life Insurance served as the provider of the cash option, offering cash options to dissenting shareholders of Haitong Securities. It allowed dissenting shareholders of Haitong Securities A shares to sell their dissenting shares to Taiping Life at a price of 9.28 yuan/share.

However, since the closing price of the A-share secondary market was significantly higher than the acquisition prices of the two institutions, ultimately, during the declaration period of this acquisition request right, no A-share dissenting shareholders declared to exercise their relevant rights.

Haitong will implement share exchange after delisting

After one brokerage withdraws and the other resumes trading, what work will continue to be advanced?

The primary task is, of course, the "share exchange" of Haitong Securities' existing shares.

According to the announcement from Haitong Securities, the company will publish a delisting announcement after the Shanghai Stock Exchange and Hong Kong Stock Exchange approve its application for delisting.

Subsequently, Haitong Securities will delist and simultaneously initiate the conversion of its shares into Guotai Junan shares.

According to the share exchange plan, each 1 share of Haitong Securities A shares can be exchanged for 0.62 shares of Guotai Junan A shares, and each 1 share of Haitong Securities H shares can be exchanged for 0.62 shares of Guotai Junan H shares.

After the above share exchange actions are completed, the shares issued by Guotai Junan to all A-share exchange shareholders will be listed and traded on the Shanghai Stock Exchange; the shares issued to all H-share exchange shareholders will be listed and traded on the Hong Kong Stock Exchange.

New company trademarks attract attention

After the completion of the listing, delisting, and share exchange processes of the two companies, a series of tasks will continue to unfold.

These include potential renaming work for the two brokerages, license reissuance, etc.

Currently, trademark registration data shows that Guotai Junan has applied for several new trademark names in the past six months, including Guotong Junan, Guotai Junan Haitong, Junan Haitong, Haitong Guotai, Haitong Guotai Junan, Haitong Junan, etc.

The latest application submitted is "Guotong Junan," which was submitted for review on December 12, 2024, and is currently awaiting substantive examination

Deep Integration Will Gradually Unfold

After this, there will be a deeper level of business integration, which will be a substantial step for the two brokerages to leverage integration effects, involving business division, client migration, and resolving intra-group competition among subsidiaries.

In terms of asset management licenses, the future new brokerage entity will hold shares in 富国基金 (Fidelity Fund), 华安基金 (Huazhong Fund), 海富通基金 (Haifutong Fund), 国泰君安资管 (Guotai Junan Asset Management), 海通资管 (Haitong Asset Management), etc.

How to specifically carry out deep integration remains a point of interest.

Risk Warning and Disclaimer

The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial conditions, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investing based on this is at one's own risk