Seeking information on enterprise reorganization

Review of recent cases of corporate restructuring and mergers

Editor's note Inter-company restructuring and mergers are becoming an increasingly prominent highlight of China's market economy. Since last year, Everbright Group, Tsingtao Brewery, Hainan Airlines, Vanke Real Estate, Danone Group and many other enterprises have frequently become hot news, and mergers and acquisitions of hundreds of millions of dollars are common.

A few years ago, China's metallurgy, chemical and other industries have also carried out a wide range of mergers and acquisitions, but the effect is not ideal. The reason for this is that the administrative color is too thick, there are suspicions of pulling the plug.

And since 2000, mergers and reorganization of enterprises began to appear some changes: the role of the invisible hand of the market gradually strengthened, the government's visible hand is quietly fade out. This is a market economy in the enterprise spontaneous, conscious up restructuring, with unusual significance: First, the enterprise began to use the means of the market, that is, the active use of mergers and acquisitions to adjust the industrial structure and promote industrial strategy. Secondly, the ability to utilize capital market financing has been significantly enhanced, with the proportion of direct financing rising significantly. Thirdly, some monopoly industries such as aviation, telecommunication, electric power and railroad have started to reorganize.

The main reason for choosing the following examples is that they are very representative of their respective fields and reflect some of the characteristics of the current era of mergers and acquisitions in China from different perspectives. From these examples, we can see that market forces are increasing, and corporate behavior is under increasing pressure from both sides, which is of course a necessary part of the process of being a mature and rational enterprise.

A, civil aviation announced the overall reorganization of the runway jumped out of the black stallion

July last year, the General Administration of Civil Aviation of China formally announced to the outside world, Air China, China Southern Airlines, China Eastern Airlines, the three major backbone of the airline for the mother, the formation of three major aviation group restructuring plan. According to the plan, it was first carried out among the 10 airlines directly under the CAAC, while local airlines were allowed to participate on a voluntary basis.

A month later, China Southern Airlines and China Airlines formally signed a joint reorganization agreement worth 1.5 billion yuan. It was the first merger since the CAAC announced the formation of the three major airline groups, and the first "marriage" between a national backbone carrier and a local airline.

Almost at the same time, Hainan Airlines, which often makes waves in the industry and is outside the three groups, announced it was taking a controlling stake in Shaanxi Chang'an Airlines, which will gradually put in the country's most advanced regional airliners to fly Chang'an's more than 40 regional routes and set up a network of regional airlines with Xi'an as its hub.

Early in March 2001, from the listed company Hainan Airlines, an announcement that Hainan Airlines holds a holding in the Beijing-based Xinhua Airlines. Sources at Hainan Airlines said that Xinhua Airlines has now opened nearly 50 routes from Beijing, Tianjin and Shenzhen to more than 40 cities in China, which is attractive enough for Hainan Airlines to be located on Hainan Island.

To this day, the overall reorganization of China's civil aviation plan is still delayed, the relevant program is still in the approval process.

Comment: China's civil aviation determination to implement the restructuring of two reasons: First, in the face of the upcoming accession to the WTO competition, China's civil aviation is not large, the strength of the characteristics of the big foreign airlines is difficult to deal with; the second is the reform of China's civil aviation needs, non-government, non-enterprise planning system has been more and more difficult to adapt to the market's requirements.

Despite all the criticism of China's civil aviation is very much, but we should note that China's civil aviation is, after all, after the reform and opening up of a very rapid development of an industry, due to the pace of institutional reform and understanding of the lag, civil aviation had to make huge adjustments again, and unlike other industries, due to the huge investment and the system is fixed, civil aviation's "path of dependence" seems to be stronger. Dependence" seems to be stronger, the interests and relations of the adjustment appears to be more complex, which is also the current reorganization plan can not be introduced one of the important reasons. Give more time may be more favorable, the government and enterprises are not separated, redundant serious, vicious competition, inefficiency, these "hats" should be removed one by one --- the market makes it so.

The restructuring of the system outside the people are a revitalization, quite ambitious Hainan Airlines has always been known as "good at capital operations," known as the start of the capital of only 10 million, not enough to buy a Boeing 737 wings, a few years to attract capital, listing, mergers and acquisitions, long-sleeved, rapid rise in the civil aviation reorganization, in the background. Hainan Airlines quickly into the Meilan airport, joint Changan Airlines, Xinhua Airlines, to do the aviation industry, "the fourth chair" is almost universally known. HNA's experience tells us how powerful the power of capital markets can be.

B, China Resources to increase its stake in Vanke - who is the real estate "giant"

Hong Kong China Resources Group last year, through a wholly owned subsidiary of China Resources Corporation, a one-time transfer to the deep Vanke's first major shareholder in the Shenzhen Special Economic Zone Development (Group) Company held 51,155,599,000 state-owned legal person shares, accounting for 8.1 percent of the total share capital of Vanke. The company has acquired 51.155599 million state-owned corporate shares held by Shenzhen Special Economic Zone Development (Group) Company, accounting for 8.1 percent of Vanke's total share capital. Together with Beijing Land, an indirect holding company of CR, which holds 2.71 percent of Vanke's B-shares, CR has become the largest shareholder of Vanke.

BBL also controls 70 percent of Beijing Huayuan Real Estate Co. The merger is expected to integrate the strong resources of both sides and create a "giant" in China's real estate industry: Beijing Huayuan has a large land reserve, while Vanke, as a nationally renowned listed real estate company, has profound management connotations and strong resource operation capabilities.

In 2001, the new reorganization plan of China Resources Group to increase its stake in Shenzhen Vanke was introduced, the main content of which is to increase its stake in Vanke with part of the assets and a small amount of cash of China Resources Group and China Resources Beijing Land, and at the end of the increase, the stake held by China Resources in Vanke should be at or below 30%, but the reorganization plan is now encountering a lot of resistance.

Review: Vanke is one of China's few "high-quality" companies, and often gives the impression that it is a group of people in the real estate sector. But as the second listed company in the Shenzhen market, Vanke has its own hidden worries: First, Vanke lacks smooth financing channels, unable to achieve the scale effect. 2000 Vanke's annual sales are only one-third of Hong Kong Sun Hung Kai's sales profit, more than 2 billion sales for real estate enterprises is too small; Second, Vanke lacks sufficient land reserves, Vanke's land resources in Shenzhen are not much, and it is even more difficult to find a good deal in the country. In the country, it is even more difficult to find good projects, to become a large national real estate developer, this has become a bottleneck; Third, the equity structure is fragmented, 1993-1997, Vanke's largest shareholder's shareholding ratio of less than 7%, such a fragmented shareholding structure is very easy to become the acquisition of the securities market. This is a typical enterprise development that is born in the market, grows in the market, and is restricted by the market.

So despite Vanke's good performance in the market, Wang Shi, the sober chairman of the board, yelled "I want to sell Vanke" a few years ago, and in 2000 Vanke finally succeeded in replacing its major shareholder, backed by a more powerful new owner, and opened up channels for financing to the international market; and if CRH's shareholding eventually reached 30 percent, it could be a major player in the stock market. If China Resources eventually reaches a 30 percent stake in the company, and fears of a takeover in the stock market dissipate, Vanke's reorganization since last year could be a win-win situation.

The integration of resources comes from the power of the market, and although we still see the role of capital here, Vanke won't reorganize without the enormous pressure of market competition.

We also need to remind Vanke that despite its excellent corporate culture, the turnover rate of middle-level cadres reached 14 percent in last year's reorganization, which shows that the reorganization is so difficult that it has to be careful.

C, Tsingtao Brewery strong expansion of the beer industry into the "age of war"

Qingdao Brewery Group spent about 400 million yuan to buy eight breweries around the country, of which the most famous two: 150 million yuan to buy a 75% stake in Shanghai Carlsberg, the United States at a price of 22.5 million U.S. dollars. Asian strategic investment company in the "five-star" 62.46% of the equity and in the "three rings" 54% of the equity.

So far, Tsingtao Brewery Group through mergers and acquisitions to make its own production capacity of 1.8 million tons, accounting for about 8% of the national beer market, becoming the national market "beer boss". As early as 1994, Tsingtao Brewery Group began its own acquisition program, after the acquisition of Yangzhou Brewery in 1994, over the past six years **** invested 400 million yuan has been merged with Xi'an, Pindu, Jixi, Ma'anshan, Shanghai, Guangdong and other places of the 26 beer enterprises.

On March 20, 2001, Yanjing Brewery (Qufu Sankong) Limited Liability Company was officially listed, which is Yanjing Brewery's third joint venture in Shandong, a move that will make the beer duo's market competition in the country more intense.

Review: The beer industry has entered an "age of warring states", a judgment made by the newspaper in 2000 when it reported on the takeover battle by Tsingtao Brewery, which is said to have been recognized by a number of industry insiders.

From the group of men and women to the current dominance of the lords, what other trends are there in the beer industry? Jack, chairman of the Asian strategic investment company is a senior investment banker, the reporter talked about this topic in his many interviews, although he invested in China's five-star beer failure has become a symbol of foreign capital out of China's beer industry, but I believe that his judgment is still a certain reason, otherwise there will not be a large number of foreign investors are still eyeing China's beer industry. Mr. Jack's judgment has two main points: First, the beer industry is quite profitable, and China's beer consumption potential is huge; second, the beer industry will continue to reorganize, the degree of monopoly concentration continues to strengthen, and ultimately the formation of a few large national manufacturers in the country.

Familiar with the development trend of the world's beer industry can agree with Jack's point of view, the same in China, with the continuous improvement of the market, China's beer industry is also taking the same road, so the next few years, China's beer industry will also explode all kinds of small and large mergers and acquisitions news.

The development of Tsingtao Brewery is certainly a major trend, but in this series of mergers, we also have some concerns, whether there are excellent investment banking consultants in the overall planning, whether there are enough funds to continue to complete the acquisition program, whether there are excellent management personnel to integrate the resources, and whether there is a unified and perfect corporate culture to cover the acquired companies. After all, mergers and acquisitions are a kind of "high-level game" between enterprises in the market economy, which requires high skills and abilities.

D, Danone left and right to open the "bow" - is the water is milk is mingling

December 6, 2000, two days, the French company Danone has announced the acquisition of Shanghai Meilin, Haihong shares held by the Shanghai Meilin and Drinking Water Company, Ltd. 50% of the shares and 10% of the company's online shopping and Zheng Guanghe. The two acquisitions involved nearly 1.5 million shares. The two acquisitions amounted to nearly 180 million yuan, so that Danone in the domestic bottled water, bottled water market has become a well-deserved boss.

Almost simultaneously, Danone took a 5 percent stake in Shanghai Bright Dairy Co. in cash. Danone is also negotiating with Bright Dairy to give its yogurt companies in Guangzhou and Shanghai and its fresh milk company in Shanghai to Bright Dairy, which would use Danone's brand for free.

By now, France's Danone has taken a controlling stake in 10 companies in China, including the famous Wahaha and Lobelia. Qin Peng, president of Danone China, said the Chinese market in Danone's global business is now less than 5 percent of the proportion of the headquarters hope to reach 10 percent in five years, and then five years to reach 20 percent. As you can imagine, Danone's layout in the Chinese market is far from complete.

Review: France's Danone is not as well known in China as Procter & Gamble and Unilever, nor is it very well known. Danone's performance in China since last year reinforces the fact that the group's approach to China is very different from that of other multinationals.

In fact, Danone's strategy has been almost identical in every country in the world, using mergers and acquisitions and other capital maneuvers to move quickly into the country's leading beverage companies, quickly capture the market and keep the original brands. In terms of strength, Danone has now become the world's fifth largest food company, the first dairy company, and more than 30 years ago it did not cross into the food industry. 1973, France's leading manufacturer of beer, mineral water and baby food, BSN, merged with Danone to form France's largest food group, and in the 1980s, the Danone Group sold its glass business to focus on the development of food products, through a series of acquisition Through a series of acquisitions, joint ventures and partnerships, Danone penetrated the markets of other European countries. In the last 10 years, Danone's business focus has shifted to globalization, entering markets in Asia and Latin America.

70% of Danone's turnover comes from local leading brands. It can be seen that one of the strategies of Danone's globalization is to make merger and acquisition, joint venture or cooperation with local leading brands to realize the localized sales of Danone brands and to profit from the strategic investment in local leading brands. It can be argued that Danone is essentially a powerful master of capital maneuvering.

This is another way for multinationals to enter China, and it's sure to be an eye-opener for many Chinese companies, especially those eager to expand or short on cash. There's no point in discussing whether this approach will be good for China or whether it will impact national industries, as those questions are of no real significance. Although China's market economic system is not perfect, but as a profit-seeking individual enterprises, the transaction between them must be very rational, and both sides can accept the transaction price and conditions, otherwise the transaction will not be successful. What can be left to the market, try to leave it to the market, which is what Danone's entry into China in this way reveals.

E, Everbright into the Shenyin-Wanguo - mixed industry, divided into disputes

China Everbright Group last year formally transferred from the Shanghai Finance Bureau for the Industrial and Commercial Bank of China held Shenyin-Wanguo Securities Co. 246.4 million shares, accounting for Shenyin-Wanguo all the shares of the 18.67%, becoming the largest shareholder. China Everbright Group is a comprehensive multinational enterprise group directly under the State Council with finance as its main business, including China Everbright Bank, Everbright Securities Corporation and Sino-foreign joint venture insurance companies, etc. It also owns 6 listed companies in Hong Kong and Singapore. Shenyin Wanguo is the earliest securities company established in New China, with a registered capital of 1.32 billion yuan, and is the first joint-stock company in China.

China Everbright Group Chairman Wang Mingquan recently put forward the group's direction of development: vigorously develop the financial industry, and strive to use three years to make Everbright Group enter a new stage of development, mainly in finance, and build into a standardized financial holding group.

Review: In fact, Everbright's ownership of Shenyin Wanguo does not fully explain the financial industry's separation and mixing of the dispute, because Everbright Group itself has Everbright Securities, Everbright Bank and insurance companies. However, because this event occurred in 2000, when the international financial industry was in full swing, the domestic financial industry, the mixed industry and the separation of the dispute was also intense. The incident was seen as a pilot for the domestic debate.

November 1999, the U.S. Congress formally passed the Financial Modernization Act, allowing banks to hold shares of the company can be upgraded to a financial holding company, allowing the upgraded or newly established financial holding company to engage in any financial nature of the business, that is, the banking, securities and insurance business, but its mixed business is to be realized through the subsidiaries engaged in different businesses, the subsidiaries are legally and operationally relatively independent companies. subsidiaries are relatively independent companies legally and operationally. This bill ended the 60-year history of separation of the U.S. financial industry, and is also recognized as a sign that the trend of the world's financial industry is toward mixed operations. But is this a permanent end? Not necessarily, the reporter in the United States financial history books, found that the financial industry in the United States is also divided and combined, combined and divided, much repeated. Indeed, the financial industry to the mixed industry has different conditions from the past: the rise of multinational corporations and the trend of globalization.

China will naturally face the impact of multinational corporations and globalization, as well as the challenge of joining the WTO, and the financial industry will be the trend towards mixed industry, but in a gradual and orderly manner, and as soon as possible to improve the level of supervision. If the next few years, once the policy is loosened, the domestic financial industry will also produce a wave of mergers and acquisitions.

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