Dongwu Securities Plans to Acquire 83.77% Stake in Donghai Securities, Opening New Chapter in Cross-Market Integration of Jiangsu Brokerages

On the evening of March 13, Dongwu Securities announced a major asset restructuring plan, stating that it intends to acquire a total of 83.77% equity of Donghai Securities held by 61 shareholders, including Changzhou Investment Group, through a combination of issuing shares and paying cash. The company’s stock will resume trading on March 16 after suspension.

It is understood that Dongwu Securities first disclosed its acquisition intention on March 1, proposing to purchase 26.68% of Donghai Securities held by Changtou Group through issuing shares. Subsequently, the scope of the transaction was expanded. On March 13, the company’s 35th (extraordinary) meeting of the fourth board of directors approved the relevant transaction plan, officially finalizing the core scheme to acquire 83.77% of the equity, involving 1.554 billion shares. To facilitate the smooth progress of the transaction, Dongwu Securities has signed a Framework Agreement for the issuance of shares and cash purchase of assets with 61 counterparties, clarifying key terms such as transaction methods and issuance prices.

According to the plan, the issuance price for the shares is set at 9.46 yuan per share, based on the average trading price of Dongwu Securities A-shares over the 20 trading days prior to the pricing date, rounded up to the nearest cent, with a dynamic adjustment mechanism in place to account for any dividend or bonus issues during the period. The payment methods for the transaction offer two options: one is to pay 92% of the transaction amount with newly issued shares and 8% in cash; the other is to pay the entire amount with shares, with the counterparty free to choose.

One of the key changes in this transaction is the adjustment of the equity structure. Before the deal, Donghai Securities was controlled by Changtou Group, which is owned 90% by the Changzhou Municipal Government and 10% by the Jiangsu Provincial Finance Department, essentially a securities firm under the Changzhou State-owned Assets Supervision and Administration Commission. Dongwu Securities was controlled by Suzhou International Development Group, a wholly state-owned enterprise under the Suzhou Finance Bureau. After the transaction, Dongwu Securities will become the largest and controlling shareholder of Donghai Securities, with the actual controller changing to Suzhou International Development Group. Changtou Group will become an important shareholder of Dongwu Securities, further optimizing the ownership structure of both parties.

The strategic intent behind this integration is clear. Dongwu Securities stated in its announcement that advancing the construction of a strong financial nation requires robust financial institutions as support. By cultivating top-tier investment banks, they aim to better serve the development of a modern industrial system and new productive forces. As two major local securities firms in Jiangsu, Dongwu Securities and Donghai Securities are highly complementary in regional layout and business structure: Dongwu Securities has a strong presence in Suzhou, with competitive advantages in investment banking, bond underwriting, research, and consulting; Donghai Securities is rooted in Changzhou, with distinctive strengths in wealth management, fixed income, futures, and derivatives, and has accumulated extensive regional client resources.

Scale effects and synergistic value are key market focuses. According to financial data estimates, by the end of the first half of 2025, Dongwu Securities’ total assets will reach 171.9 billion yuan, with net assets of 43.2 billion yuan; Donghai Securities’ total assets will be 57.1 billion yuan, with net assets of 10.3 billion yuan. After integration, Dongwu Securities’ net assets are expected to reach 53.5 billion yuan, ranking from 18th to 14th among listed securities firms. If the 2024 financial data are combined, the total operating revenue of both parties will be approximately 13.003 billion yuan, with a combined net profit attributable to shareholders of about 2.389 billion yuan, and total assets around 231.449 billion yuan. Dongwu Securities’ revenue ranking will rise from 14th to 13th, significantly enhancing overall strength.

The improvement of regional service capabilities is also highly anticipated. By the end of Q1 2025, Dongwu Securities will have 30 branches and 133 securities business departments, mainly distributed in Suzhou, Zhejiang, and other areas; Donghai Securities has 17 branches and 69 business departments, concentrated in Changzhou, Henan, and other regions. Post-integration, the coverage of both networks will expand further, especially enhancing service density in the Suzhou-Wuxi-Changzhou metropolitan area, better supporting regional industrial upgrades and the cultivation of new productive forces, and helping implement the Yangtze River Delta integration strategy.

Regarding personnel arrangements, Dongwu Securities clarified that there are no plans to adjust the employment of Donghai Securities staff at this time. If adjustments are needed within the next 12 months, they will follow legal procedures strictly. Additionally, since audit and valuation work has not yet been completed, Dongwu Securities will not hold a shareholders’ meeting to review this transaction for now. The relevant matters will be discussed in subsequent board and shareholders’ meetings after the work is finalized.

In the context of accelerated industry transformation and regulatory encouragement of resource integration, this merger between Dongwu Securities and Donghai Securities is of benchmark significance. As the first cross-city provincial state-owned securities firm integration case within Jiangsu, its successful implementation will serve as a reference for domestic regional securities mergers. It is expected that resource integration among regional securities firms will become an important industry trend in the future.