Image source: Visual China

Interface News Reporter |

After six months, the merger and acquisition of Runyang shares by Tongwei Co., Ltd. (600438.SH), which has attracted much attention in the industry, finally collapsed.

On the evening of February 14, Tongwei Co., Ltd. announced that it would terminate the intentional capital increase to Jiangsu Runyang New Energy Technology Co., Ltd. (hereinafter referred to as Runyang Shares), which means that it will terminate the acquisition of Runyang Shares.

This is half a year after the announcement of the acquisition on August 13 last year. At that time, Tongwei Co., Ltd. announced the acquisition of Runyang Co., Ltd., the world's fifth largest battery factory, for 5 billion yuan, causing a "big earthquake" in the industry. As a result, industry insiders have speculated whether the curtain of industry mergers and acquisitions has been opened.

Tongwei Co., Ltd. said in the latest announcement that since the signing of the capital increase intention agreement, its business team and various intermediaries have actively carried out in-depth audit, evaluation, legal and business due diligence on Runyang shares, and the parties to the transaction have also continued to benefit the long-term sustainable development of Runyang shares and related parties as the goal, and have conducted multiple rounds of detailed and comprehensive communication and consultation, but up to now there are still some commercial terms that have not been agreed, and finally reached a consensus. It was decided to terminate the intent to increase the capital increase, and the agreement on the intent to increase the capital was also terminated at the same time.

An industry insider told Jian News that Tongwei's termination of the acquisition of Runyang may be due to the consideration of "stopping the bleeding" in the context of the industry's losses, terminating large capital expenditures, waiting for the recovery of the industry, or its final choice after careful consideration.

Tongwei and Runyang still maintain the possibility of cooperation.

Runyang Co., Ltd.'s main business is the R&D, production and sales of photovoltaic cells, and at the same time involved in industrial silicon, polysilicon, silicon wafers, modules and photovoltaic power station business, and has formed a polysilicon production capacity of more than 130,000 tons through Inner Mongolia Runyang Yueda New Energy Technology Co., Ltd. and Ningxia Runyang Silicon Material Technology Co., Ltd. (hereinafter referred to as the project company).

Tongwei is a leading polysilicon company in the world. Based on the business background of both parties, the announcement stated that the two parties intend to explore the operation cooperation of the project company's polysilicon business: Tongwei will provide professional technology and management support to assist the project company in improving its operation and management and optimizing the industrial competitiveness of the project company's polysilicon business.

"The specific cooperation matters are still in preliminary discussion, and there are uncertainties." Tongwei said.

According to the announcement, the capital increase intention agreement signed in the early stage is only the preliminary intention reached by the parties to the transaction. Tongwei said that it has not paid any money to other parties in this transaction, and after the termination of the agreement on capital increase, the parties to the agreement still need to continue to abide by the confidentiality clause, but none of the parties to the transaction need to bear compensation and legal responsibility for the termination of this transaction.

According to the original acquisition plan disclosed last year, Tongwei Co., Ltd. signed an agreement of intent to increase capital with Jiangsu Yueda Group Co., Ltd. (hereinafter referred to as Yueda Group) and other parties. After the signing of the agreement, Yueda Group will increase the cash capital of Runyang shares by 1 billion yuan.

After Tongwei Co., Ltd. completes the due diligence and other work and reaches a formal capital increase plan, it will increase the capital of Runyang Co., Ltd. in cash with its own or self-raised funds, and at the same time acquire the equity of Runyang Co., Ltd. obtained by Yueda Group in cash, and obtain a total of not less than 51% of the equity of Runyang Co., Ltd.

The estimated amount of the transaction does not exceed 5 billion yuan, and if it is successfully implemented, Runyang will become a holding subsidiary of Tongwei Co., Ltd.

However, the cold winter of the industry has been continuing, and the leaders of the silicon industry chain such as Tongwei have already "lost money". In January this year, Tongwei Co., Ltd. issued a performance forecast, estimating its net loss of 7 billion to 7.5 billion yuan last year.

Runyang Co., Ltd. was originally a "leader" in the photovoltaic cell sector, with a valuation of 40 billion yuan. However, its IPO experience did not go smoothly, and the IPO registration approval expired after 12 months, and the listing process, which lasted more than two years, finally failed.

At the beginning of last year's announcement, Tongwei's consideration of the acquisition was mainly related to improving the layout of the industrial chain and expanding overseas markets.

Runyang Co., Ltd. has a complete industrial layout from upstream industrial silicon to terminal photovoltaic power stations, as well as production capacity and market accumulation in overseas regions such as the United States, Thailand, and Vietnam.

Tongwei believes that Runyang's overseas production capacity can meet the traceability requirements of overseas markets, and the transaction is conducive to supplementing its overseas production capacity layout and expanding sales channels in overseas high-premium markets.

Since then, the acquisition has progressed slowly, and negative information about Runyang shares has continued.

In November last year, Runyang Thailand's Phase IV module plant was temporarily suspended, and the company continues to be "entangled" with Trina Solar (688599.SH) over patent issues.

At the same time, Tongwei's caliber on the acquisition issue is also quietly changing. On November 12 last year, Tongwei Co., Ltd. said in its reply announcement on matters related to the suspension of production capacity of Runyang Co., Ltd. that it did not rule out that the original transaction plan may be adjusted or terminated; During the negotiation process, the parties to the transaction are also actively exploring other integration options.

In fact, since Tongwei announced the acquisition of Runyang shares, there have been doubts in the industry. Last year, a number of industry insiders told Jian News reporters that the acquisition was likely to not happen.

An industry insider, who did not want to be named, said that Tongwei's own production capacity is already very large, and it wants to acquire Runyang shares, and the most interested may be the latter's overseas market. However, at present, the overseas market is not as good as it was at the beginning, and the policy uncertainty and trade barriers in Southeast Asia, the United States and other markets are relatively large. This transaction is more like a kind of replacement between the Yancheng Municipal Government and Tongwei and Runyang, that is, to solve the capital problem of Runyang in the early stage.

At the end of September last year, the registered capital of Runyang Co., Ltd. increased from 360 million yuan to 450 million yuan, and the chairman was changed from Tao Longzhong to Zhang Naiwen, who is currently the chairman of Jiangsu Yueda Group. The actual controller of Yueda Group is the People's Government of Yancheng City.

This means that state-owned assets are not only deeply involved in the growth of Runyang shares, but also play a role in saving the market in this round of industry downward cycle.

Up to now, Tianyancha APP shows that the largest shareholder of Runyang shares is Tao Longzhong, with a shareholding ratio of about 40.3%, and he is the founder of the company; The second largest shareholder is Shanghai Yueda New Industrial Group New Energy Co., Ltd., which is a wholly-owned subsidiary of Yueda Group, with a shareholding ratio of about 19.5%.

Image source: Tianyancha

Since last year, associations, governments and other levels have repeatedly advocated mergers and acquisitions in the photovoltaic industry, but there are few examples of implementation at the enterprise level. In the context of the imbalance between supply and demand and the loss of the industrial chain, few companies are willing to acquire more production capacity and can come up with a large investment cost.

In addition to Tongwei shares, CATL was also revealed to be acquiring a new energy of "photovoltaic dark horse" last year, but Zeng Yuqun, chairman of CATL (300750.SZ), responded to Jiemian News that he had never considered acquiring photovoltaic companies. Since then, there has been no more news of mergers and acquisitions in the industry, and more state-owned assets are dragging the bottom for enterprises on the verge of bankruptcy.