Ji Yao Holding Puts Plan to Buy China's No. 3 Private Drugmaker on Ice; Shares Gain
Liao Shumin
DATE:  Jul 26 2019
/ SOURCE:  yicai
Ji Yao Holding Puts Plan to Buy China's No. 3 Private Drugmaker on Ice; Shares Gain Ji Yao Holding Puts Plan to Buy China's No. 3 Private Drugmaker on Ice; Shares Gain

(Yicai Global) July 25 -- Ji Yao Holding Group has shelved a plan to acquire China's third-biggest closely held drugmaker Xiuzheng Pharmaceutical in a share issue that would have been the first backdoor listing on Shanghai's new Nasdaq-style trading venue. Ji Yao's shares went limit up.

The two Tonghua, Jilin province-based firms decided to hold off until clearer and more specific guidelines for the reorganization of assets in companies listed on the Star market become available, Ji Yao said yesterday.

The China Securities Regulatory Commission sought feedback on revising regulations governing the asset reorganization of listed companies last month but has not yet released any new regulations.

The acquisition has been compared to a snake trying to swallow an elephant. Xiuzheng far outstrips Ji Yao in terms of sales performance. Last year, the holding company's net profit dropped 55 percent to CNY900 million (USD131 million) and in 2017 it fell 27 percent. As of July 10, its market value was only CNY3.6 billion.

In stark contrast, Xiuzheng had operating revenue of CNY63.8 billion (USD9.3 billion) last year and ranked 89th on the 2018 list of the top 500 private firms issued by the National Federation of Industry and Commerce. In this year's Loong Palace Hurun Global Rich List, the firm's controllers Xiu Laigui and his wife were in 792nd place with estimated assets of CNY20.5 billion.

Ji Yao's stock [SHE:300108] resumed trading today after being halted to allow for the expected asset restructuring, and immediately rose by the daily 10 percent limit to CNY5.49 (80 US cents).

Xiuzheng has long planned to go public but despite reports of its intention to raise HKD11.7 billion (USD1.5 billion) through a Hong Kong initial public offering has for various reasons not been able to do so.

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Keywords:   Ji Yao Holding Group,Xiuzheng Pharmaceutical Group,Backdoor Listing