In a move that marks the acceleration of consolidation in Chinese brokerage firms, China’s Guolian Securities Co said it will acquire Sinolink Securities Co through a share swap and stake purchase.
The development comes at a time when financial conglomerates including Changsha Yongjin Group, which controls Sinolink, are under pressure to restructure, with Beijing tightening supervision of financial holding firms.
China is encouraging more M&A activity in order to create players which can compete with foreign giants such as Morgan Stanley and Goldman Sachs.
In a filing with the Shanghai Stock Exchange, Guolian said it plans on issuing China-listed A-shares to all Sinolink shareholders in an equity swap. In addition, it would buy a 7.82% stake in Sinolink from Yongjin.
Both firms did not disclose the value of the acquisition, saying these have “yet to be negotiated.”
On Monday, since the merger contains uncertainties the trading of shares in both companies at the Shanghai Stock exchange was halted.
Sinolink is backed by the government of the southern city of Wuxi.
Guolian is worth 39.42 billion yuan.
China is pushing to combine second-tier players like First Capital Securities with Capital Securities.