Press Release

FCIB acted as the lead sole independent financial advisor and co-lead underwriter of the Merger by Absorption via share issuance transaction and its concurrent financing

2022-01-14

Equity M&A - Tangshan Jidong Cement Co.,Ltd.’s Merger by Absorption with Jinyu Jidong Cement (Tangshan) Co.,Ltd. and Supporting Fund-raising via Share Issuance

FCIB acted as the lead sole independent financial advisor and co-lead underwriter of the Merger by Absorption via share issuance transaction and its concurrent financing 

Transaction Overview:

First Capital Investment Banking Co., Ltd (“FCIB”) acted as the lead sole independent financial advisor and co-lead underwriter for Tangshan Jidong Cement Co.,Ltd. (the “Jidong Cement” or “Listed Company”) acquiring 47.09% equity of Jinyu Jidong Cement (Tangshan) Co.,Ltd. (the "Joint Venture Company ") and merging by absorption with the Joint Venture Company via share issuance along with supporting fundraising (the "Transaction"), which has been successfully completed with newly added shares for merger by absorption and supporting fundraising respectively being issued on 16th Dec.,2021 and 14th Jan.,2022. In this transaction, the Listed Company issued shares to BBMG Group Co., LTD. ("BBMG Group") to purchase 47.09% equity in the Joint Venture Company and to merge by absorption with the Joint Venture Company, with consideration of RMB 13.623 billion and supporting capital of RMB 2 billion have been raised. 

Transaction highlights:

In this transaction, the Listed Company issued shares to purchase 47.09% equity of the Joint Venture Company held by BBMG Group and simultaneously merged by absorption with the Joint Venture Company. The Joint Venture Company was jointly invested by BBMG Group and Jidong Cement in the previous M&A transaction. On the one hand, the transaction successfully prompted BBMG Group to make Jinyu-Jidong Strategic Restructuring Plan which has sustained for five years come to an end; on the other hand, it also enabled the Listed Company to strengthen its main business, and to substantially increase equity capacity, Net Assets attributable to shareholders, Net Profit attributable to shareholders and other equity indicators.

The target company of the transaction are composed of 50 branches and subsidiaries with total assets of more than RMB 40 billion, which came into being a big challenge to FCIB team for the large volume of assets and the wide scope of verification, while the issuance of shares to purchase assets and to merge by absorption requiring to be undertaken simultaneously, which to a certain extent invisibly increased the complexity of the whole transaction. Meanwhile, the transaction also involved multiple regulatory communications and various information disclosures of China Securities Regulatory Commission, Shenzhen Stock Exchange, Shanghai Stock Exchange and Hong Kong Stock Exchange. FCIB team launched this project as a lead independent financial advisor and also a co-lead underwriter since late February 2021, dominating comprehensively, coordinating efficiently, and executed the schedule strictly throughout the whole process. Under the circumstances of the cement industry’s downturn in 2021 and the high execution pressure from national strong regulatory to dual control of energy consumption, FCIB team fully prepared settling all the matters appropriately without any delay, which leading a result that it only took 8 months to obtain unconditional approval by CSRC Merger and Restructure Committee in October 2021 and CSRC in early November. This transaction is the only one successful deal in the whole A-share market of the M&A with more than 10 billion assets in 2021 that announced the M&A pre-plan and completed implement within the same year, and the second largest deal among the completed implements in the A-share market in 2021.

During the execution of this transaction, the cement industry suffered from various impacts of many adverse factors, such as the soaring coal price, the pressure from national strong regulatory to dual control of energy consumption, the decline of market demand as well as the tremendous sales pressure of fundraising. FCIB team raced against the time, mining investment highlights, decisively analyzing the market, grasping the opportunities timely and conducted the accurate issuance strategy. The final total subscription volume of supporting financing reached RMB 3.372 billion, 2.25 times than the volume authorized of RMB 2 billion for the market subscription volume excluding the RMB 500 million subscribed by major shareholders of the List Company; the offering price is RMB 11.20 per share, 17.6% higher than the 20% discount of the market offering floor price, and 5.8% higher than Book Value of Equity Per Share. In addition, the subscribed shareholder structure in this transaction are of particularly high quality, including the industrial investors e.g. CNBM Investment, China Cinda, but also attracted the top public funds e.g. E-Funds, TaiKang AMC, Harvest Fund, Nuode Fund as well as the top foreign institutions e.g. UBS, GUOTAI JUNAN SECURITIES(HK) which has realized a win-win for the quantity and price of the concurrent financing raised.

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