In recent years, listed companies have seen frequent mergers and acquisitions and reorganization activities, and the size of the M&A market is showing a blowout state. China National Chemical Corporation and Sinochem Group were approved to implement joint reorganization, Sichuan Trading Investment and Sichuan Railway Investment merged to form Shudao Group, Liaoning proposed to promote the joint reorganization of central iron and steel enterprises such as Anshan Iron and Steel and Benxi Iron and Steel... Recently, as a state-owned capital optimization layout And one of the important ways to adjust the industrial structure, a new round of state-owned enterprise mergers and reorganizations is speeding up, and more "new actions" are being brewed.

The industry pointed out that 2021 is the first year of the "14th Five-Year Plan" and a key year for the three-year reform of state-owned enterprises. State-owned enterprises are expected to usher in a continuous upsurge of mergers and acquisitions, especially local state-owned assets will have greater actions and steps. From an industry perspective, chemical industry, steel, coal power, information, medical and health, etc. will be key areas, and strategic emerging industries will also increase their layout. It is worth noting that the reorganization of state-owned enterprises will be more integrated with reforms such as mixed reform, and the capital market is an important stage. Experts suggest that while reorganizing and integrating, state-owned enterprises should be vigorously promoted to deepen the reform of their internal systems and mechanisms, so as to improve the market competitiveness of state-owned enterprises.

State-owned enterprise reorganization has become an important means of optimizing layout

On April 6, 2021, the People's Government of Liaoning Province issued the "Fourteenth Five-Year Plan for National Economic and Social Development of Liaoning Province and the Outline of Long-term Goals for 2035." The document proposes to speed up the optimization and structural adjustment of the state-owned economy. Promote the joint reorganization of iron and steel enterprises in central regions such as Anshan Iron and Steel and Benxi Iron and Steel, and cultivate world-class iron and steel enterprises. And just four days ago, Sichuan Road and Bridge issued an announcement stating that the controlling shareholder Sichuan Railway Investment and Sichuan Communications Investment signed a merger agreement to establish a new company "Shudao Group."

This is a microcosm of the acceleration of the merger and reorganization of local state-owned enterprises since 2021. According to reports, at the beginning of the year’s meeting of local SASAC leaders when deploying key tasks in 2021, localities should study and formulate the "14th Five-Year" state-owned assets plan for the region, and increase investment in specific functional areas and important industries supported by local key guidance. . Develop forward-looking strategic emerging industries. It is necessary to actively and steadily promote strategic restructuring and professional integration, and accelerate the pace of restructuring in industries where repeated investment or homogeneous competition and disorderly competition are serious.

At present, the roadmap for mergers and acquisitions and reorganization in many places has gradually surfaced. For example, in 2021, Shandong will deeply implement strategic reorganization and integration, and complete the reorganization and integration tasks of some provincial enterprises. Hubei is studying the establishment of Hubei Port Group to implement the integration of Yangtze River and Han River port resources. The Hunan State-owned Assets Group will consolidate its directly-managed enterprises to about 10 households. Sichuan Guangyuan plans to integrate and reorganize the original 144 municipal state-owned enterprises directly supervised by the Municipal State-owned Assets Supervision and Administration Commission into 10 major groups.

Li Hongjuan, deputy director of the Enterprise Research Office of the Institute of Economic System and Management of the National Development and Reform Commission, said that the reorganization of state-owned enterprises has become an important means of optimizing the layout of state-owned capital. In the future, state-owned assets will take greater steps and steps to promote industrial development and promote capital preservation and appreciation.

ChemChina and Sinochem have been approved to implement joint reorganization, China Potevio and China Electric Power are planning to reorganize; State Grid's equipment manufacturing enterprises and China Xidian Group are planning a strategic reorganization... The reorganization and integration of central enterprises are also speeding up.

The work arrangements for 2021 announced by the Enterprise Reform Bureau of the State-owned Assets Supervision and Administration Commission show that it is necessary to steadily advance the strategic reorganization of central enterprises in the chemical, steel, and information fields, and guide enterprises to focus on national strategies to actively and steadily carry out mergers and acquisitions. Support central enterprises with medical and health as their main business to further integrate resources and cultivate competitive medical and health groups. Deepen the reduction of production capacity of steel and coal for central enterprises.

The China Coal Industry Association has proposed that the "14th Five-Year Plan" will promote mergers and reorganizations of enterprises and establish 10 billion-ton coal enterprises. The regional integration of coal power resources led by the five major power groups is also accelerating.

Zhang Zhengao, general manager of Poly Group, said that during the "14th Five-Year Plan" period, the main business of the reorganized enterprise will be further highlighted and strengthened through professional integration, deepening reform, management improvement, capital injection, collaborative innovation, and liquidation and exit. At the same time, in accordance with the functional positioning of state-owned capital investment companies, as well as the requirements of state-owned capital layout optimization and structural adjustment, combined with the actual development of the main business, the orderly and effective promotion of mergers and acquisitions and reorganization.

China Minmetals will implement strategic restructuring and integration in 2021, actively promote external mergers and acquisitions, and at the same time fully promote the restructuring and integration with central enterprises and local state-owned assets. China Baowu has also made it clear that it will vigorously promote mergers and reorganizations, achieve new breakthroughs in high market share, and form a scale leading effect of "over 100 million tons of Baowu".

Promote the transformation of state-owned enterprise systems

Zhu Changming, head of the Sunshine Times Law Firm State-owned Enterprise Mixed Reform and Employee Stock Ownership Research Center, believes that the reorganization and integration of state-owned enterprises is an effective way to further deepen the reform of state-owned enterprises, and it is also the only way to strengthen and expand state-owned capital and state-owned enterprises. This year is a critical year for the three-year reform of state-owned enterprises, and also the first year of the "14th Five-Year Plan". State-owned enterprises are expected to usher in a continuous upsurge of mergers and acquisitions, mainly strategic reorganization, professional integration, and the combination of the two. Reorganization can achieve complementary advantages, strengthen economies of scale, and professional integration to achieve optimal allocation of resources. At the same time, the reorganization and integration of state-owned enterprises will be combined with mixed reforms, and more attention will be paid to promoting the transformation of state-owned enterprises' systems and mechanisms.

It is worth noting that the capital market will become an important stage. The Federal Reserve Securities Research shows that in 2020, state-owned acquisitions of listed companies will be more popular, and they will mainly expand in different places. In 2021, the A-share M&A market is expected to start a bottoming and rebound, and the reform of state-owned enterprises is still a bright spot in the capital market.

Zhu Changming said that with the acceleration of the securitization of state-owned assets, more and more state-controlled listed companies are becoming the main body of the reorganization and integration of state-owned enterprises. Methods such as mergers and acquisitions, private placements, spin-offs, and share swaps are in this process. Is widely used. The reorganization and integration of state-owned enterprises will greatly activate the vitality of state-controlled listed companies and promote the vigorous development of China's capital market.

Li Hongjuan believes that local state-owned assets connect to the capital market through mergers and acquisitions, which are conducive to promoting the effective combination of state-owned capital and social capital, industrial capital and financial capital, boosting the development of local advantageous industries, forming industrial clusters, and activating economic layout.

M&A and reorganization of Chinese enterprises are at the forefront of the market, and the reshuffle is getting stronger and stronger. "As the reform enters the deep water zone, the reorganization and integration of state-owned enterprises involves a wide range of areas, and coordination is difficult." Zhu Changming suggested that while reorganizing and integrating, it is necessary to vigorously promote deepening reforms and effectively solve the problem of "integration but not integration". It is an opportunity to realize the innovation of state-owned assets and state-owned enterprises' system and mechanism, and improve the market competitiveness of state-owned enterprises. Editor/Sang Xiaomei