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Chapter 13
Asset Purchase through Private Placement 397
13.1. Introduction 397
13.2. Required Approvals and Key Regulations 398
13.3. Special Issues in Asset Purchase Through Private Placement 401
13.3.1. Qualification of the Issuer 401
13.3.2. Pricing Basis 403
13.3.3. Shareholding Lock-up 404
13.3.4. Disclosure by the Counterparty 405
13.3.5. Payment (Injection of the Non-Cash Consideration
Assets) 405
13.4. Acquisition of Sister Companies to Solve Horizontal Competition 406
13.4.1. The Deal SICHUAN SHUANGMA’S (000935.SZ)
PRIVATE PLACEMENT TO ITS PARENT LAFARGE CHINA
TO ACQUIRE THE LATTER’S 50% EQUITIES IN
DUJIANGYAN LAFARGE (FIE) 406
13.4.2. The Deal LITTLE SWAN’S (000418.SZ) PRIVATE
PLACEMENT TO ITS PARENT MIDEA APPLIANCES (000527.SZ)
TO ACQUIRE THE LATTER’S 69.47% EQUITIES IN
ROYALSTAR (FIE) 409
13.4.3. The Deal HISENSE KELON’S (000921.SZ; 00921.HK)
PRIVATE PLACEMENT TO ITS PARENT QINGDAO HISENSE TO
ACQUIRE THE LATTER’S EQUITY AND NON-EQUITY ASSETS 409
13.5. Asset Swap with the Parent for a Shift to New Main Business 416
13.5.1. The Deal NINGBO FUDA’S (600724.SH) PRIVATE
PLACEMENT TO ITS PARENT NINGBO CITY
CONSTRUCTION TO PAY THE BALANCE IN THE
ASSET SWAP DEAL 416
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13.6. Asset Purchase from Third Party to Enhance Asset Structure 416
13.6.1. The Deal HONGDA KNITTING’S (002144.SZ) PRIVATE
PLACEMENT TO THE SIX SHAREHOLDERS OF SHENZHEN
WELL.D TO ACQUIRE 100% SHARES OF SHENZHEN WELL.D 419
13.6.2. The Deal NEW HUAGUANG’S (600184.SH) PRIVATE
PLACEMENT TO ITS SECOND LARGEST SHAREHOLDER
CNGC SICONG AND THE LATTER’S PARTNERS TO ACQUIRE
46.71% EQUITIES IN TIANDA PHOTOVOLTAIC (FIE) 419
13.6.3. The Deal CHENGZHI SHAREHOLDING’S (000990) PRIVATE
PLACEMENT TO TSINGHUA HOLDINGS AND THE LATTER’S
PARTNER TO ACQUIRE 100% EQUITIES IN YONGSHENG
HUATSING AND SHIDZ YONGSHENG HUATSING 421
Chapter 14
Merger (by Absorption) and Separation (through IPOs) 423
14.1. Introduction 423
14.2. Required Approvals and Key Regulations 424
14.3. Special Issues in the Merger and Separation Deals 425
14.3.1. Protection of Creditors 425
14.3.2. SGM Approval and Board’s Proxy 426
14.3.3. Merger or Separation Involving FIE 427
14.3.4. Merger Control 429
14.4. Cash Option and Buy-Back Claim under Appraisal Right 430
14.4.1. Appraisal Right under the Company Law 430
14.4.2. Cash Option as an Derivative Approach
to the Appraisal Right 431
14.4.3. Cash Option Accompanied by Buy-Back Claim 433
14.4.4. The Implementation of the Cash Option
and Buy-Back Claim 434
14.4.5. The Declaration of the Cash Option and Buy-Back Claim 434
14.4.6. Trading Suspension during the Declaration Period
and Beyond 437
14.4.7. Restrictions on the Declaration 439
14.5. One-Step Public Merger: Absorption through Share Exchange 440
14.5.1. Deal Structure 440
14.5.2. The Procedures Step by Step 442
14.5.3. The Deal EASTERN AIRLINES’S (600115.SH; 00670.HK;
CEA.NYSE) ABSORPTION OF SHANGHAI AIRLINES (600591.SH)
THROUGH SHARE EXCHANGE 446
14.5.4. The Deal SHANGHAI PHARMACEUTICAL’S (600849.SH;
CHANGED TO 601607.SH POST THE MERGER) ABSORPTION
OF ZHONG XI PHARMACEUTICAL (600842.SH) AND SIIC
PHARMACEUTICAL (600607.SH) THROUGH SHARE EXCHANGE 448
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14.5.5. The Deal Tangshan Iron & Steel’s (000709.SZ)
Absorption of Handan Iron & Steel (600001.SH)
and Chengde Vanadium & Titanium (600357.SH)
through Share Exchange 451
14.5.6. Transition Stage: Consolidation of the Controlling
Shareholders of different ListCos before the Forthcoming
Merger between such ListCos 454
14.6. Merger of Non-Listed Targets 457
14.6.1. Overview of the Procedures 457
14.6.2. Deal Structures of the Merger of Non-listed Targets 460
14.7. Two-Step Merger: Merger Sub’s Cash Absorption or Cash Offer 463
14.8. Separation: The Precedent Deal Northeast Expressway’s
(600003.SH) Separation into Heilongjiang Transportation
(601188.SH) and Jilin Expressway (601518.SH) through IPOs 466
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