Shanghai-based Haitong Securities said it has agreed to be acquired by its rival Guotai Juan Securities via a share swap, in one of the largest mergers in China’s securities history.
Haitiong, 114.6 billion yuan ($16.16 billion) in market capitalisation, said late on Thursday it has reached a legally binding cooperation agreement with 130.9 billion yuan Guotai Junan for the acquisition, according to an exchange filing.
Guotai Junan plans to issue new shares to shareholders of Haitong’s A-share and H-share investors, a separate Guotai Juan filing shows. The stocks of the two firms in both markets halt trading starting on Friday.
The merger comes after Haitong suffered from quarters of profit plunges, loss-making international business and scandals such as a top investment banker fleeing overseas before being arrested.
Its net profit dropped 75% in the first six months of this year from a year ago, its latest earnings report shows.
Both Haitong and Guotai Juan are controlled by companies running state assets for the Shanghai government.
($1 = 7.0917 Chinese yuan renminbi)
Reuters
