Summary of Key Points
Driven by the "Six Measures for Mergers and Acquisitions" policy, Beizhou Stock Exchange (BZSE) company Bingyang Technology plans to acquire 100% of the equity in Zhixing Shares, a company listed on the New Third Board's Innovation Layer, through a combination of issuing shares and paying cash. This will be the first case of a BZSE company acquiring a New Third Board enterprise via share issuance. Zhixing Shares has attempted to list on the BZSE several times but had its listing process terminated; both companies operate in the non-metallic mineral products industry and have significant synergies in waste management, production processes, and raw materials. With Zhixing Shares outperforming Bingyang Technology financially, this acquisition is expected to be a win-win situation, demonstrating the interconnectedness between the BZSE and the New Third Board.
1. The Policy Boost: "Six Measures for Mergers and Acquisitions" Revitalizing BZSE Mergers and Acquisitions
The "Six Measures for Mergers and Acquisitions" are regulatory initiatives designed to encourage integration between BZSE and New Third Board companies, essentially giving the green light to mergers and acquisitions by streamlining procedures, reducing costs, and supporting share-based acquisitions. While there have been previous cases of BZSE companies acquiring New Third Board enterprises (such as Keda Self-Control's cash acquisition of Haitu Technology), this is the first instance of a share issuance-based acquisition, indicating that the policy is indeed making merger methods more flexible. This allows companies to diversify their funding strategies and provides the acquired parties with the opportunity to become shareholders and share in future profits.
2. Innovative Transaction: The First BZSE Acquisition Using a "Share Issuance + Cash" Approach
The uniqueness of this transaction lies in the combination of issuing shares and paying cash. Bingyang Technology does not need to pay the entire amount in cash; instead, it will issue some of its own shares to Zhixing Shares' shareholders and supplement with additional cash. For Bingyang, this approach avoids the need to commit a large sum of money all at once, especially considering its declining performance last year, which may have put financial pressure on the company. For Zhixing Shareholders, receiving shares gives them the potential for long-term gains by benefiting from Bingyang's growth. This also signifies that the BZSE's merger and acquisition tools have become more diverse, attracting more companies to participate.
3. The Target Company's Aspirations: From Listing Attempts to Being Acquired
Zhixing Shares had been striving to list on the BZSE since 2021, submitting multiple application materials and changing brokers without success. It terminated its listing process in May this year due to "strategic development needs." By being acquired by Bingyang Technology, Zhixing achieves a connection with the BZSE platform, potentially gaining access to resources such as financing capabilities and brand recognition. This could serve as an inspiration for other New Third Board companies that find it challenging to list independently.
4. Industrial Synergy: A Perfect Match for Both Companies
Both companies operate in the non-metallic mineral products industry with overlapping core businesses:
- They utilize waste materials (such as industrial waste) for product production (Bingyang produces ceramic granular supports, while Zhixing develops new road surface materials).
- Their production processes and raw material usage are similar.
By merging, they can streamline procurement, share research and development technologies (e.g., waste management techniques), and expand markets (for example, Bingyang's customers could use Zhixing's road surface materials). Additionally, Zhixing Shares' better financial performance (revenue of 690 million yuan vs. Bingyang's 527 million yuan, profit of 54.55 million yuan vs. Bingyang's 47.84 million yuan) can help improve Bingyang's asset structure and overall performance.
5. Performance Enhancement: Zhixing Shares Complementing Bingyang Technology
Bingyang Technology experienced a decline in performance last year (revenue down 13%, profit down 5.7%), while Zhixing Shares saw revenue and profit increases (2% and 28.7%, respectively), and it is also larger in scale. This acquisition allows Bingyang to leverage Zhixing's strengths, which can not only stabilize its performance but also expand its business and enhance market competitiveness. For Zhixing, being acquired by a larger company provides access to additional funds and resources for further business development.
Conclusion
This case marks a milestone for BZSE mergers and acquisitions and demonstrates the effectiveness of the "Six Measures for Mergers and Acquisitions." It not only enables BZSE companies to expand through flexible methods but also offers new exit pathways for New Third Board enterprises, facilitating industrial integration. For investors, it indicates that the BZSE market is becoming more active, with potential for more similar mergers and acquisitions in the future.