The industry believes that the matching financing can also be seen that the biggest dissatisfaction of shareholders is mainly due to the dilution of minority shareholders' equity rather than the acquisition of Yinlong, but Gree will continue to promote the acquisition of Zhuhai Yinlong. This is inevitably caused by its diversified expansion strategy.
This may be the biggest problem that Dong Mingzhu has encountered since he was the chairman of Gree Electric.
On the evening of October 30, Gree Electric announced an announcement to vote on the voting for the first extraordinary shareholders meeting held on the 28th. The announcement showed that 78 shareholders who passed the on-site voting represented 2,026 million shares, accounting for the total shares of the listed company. 33.6804% of the shareholders who voted through the Internet were 5063, representing 1.232 billion shares, accounting for 20.4887% of the total shares of the listed company. Among the 26 voting proposals, 15 proposals on “Proposal for Zhuhai Gree Electric Appliance Co., Ltd. to issue shares to purchase assets and raise matching funds and related party transactions (draft) and its summary†were not passed.
Earlier in August, Gree Electric announced that it would acquire Zhuhai Yinlong New Energy Co., Ltd. (abbreviation: Zhuhai Yinlong). The vote was related to the motion. According to the company's previous disclosure, Gree Electric intends to acquire 100% equity of Zhuhai Yinlong at a consideration of 13 billion yuan. According to the issue price of 15.57 yuan/share, it will issue a total of 835 million shares of the company to all shareholders of Zhuhai Yinlong. The non-public offering of shares at the same price raised no more than 9.7 billion yuan of matching funds for the construction of the Zhuhai Yinlong project, including 8 specific targets including Gree Group, the company's employee stock ownership plan, and Guangdong Yintong Investment Holding Group Co., Ltd. .
Whether the matching fund-raising means that the 9.7 billion non-public offerings are not recognized, and in order to avoid the impact of the news on the current Gree Electric share price, Gree Electric announced a temporary suspension of the day before the opening on October 31. What should Gree do next? It was learned from a Gree executive that Gree will continue to advance the acquisition by adjusting the program.
Has the acquisition been approved?At the shareholders' meeting on October 28, the attitudes of small and medium-sized investors played a decisive role because of the need to avoid related parties (large shareholders, management) involved in supporting financing. According to the poll results of the reporter's inspection of the shareholders' meeting, among the 15 proposals that were rejected for supporting financing, the black and abstention votes were all voted by small and medium-sized investors, and the proportion of the overall approval of the motion was not more than half.
It is worth noting that even in a few bills that did not involve supporting financing, the opposition of small and medium investors was quite clear. For example, in the proposal of obtaining the rights to purchase assets through the issue of shares, the proportion of opposition and abstentions among small and medium investors has reached 67%, only because under this circumstance, Gree Group, Dong Mingzhu, etc. are not involved in the related party transactions, and the overall Shareholders’ opposition and abstention ratios were reduced to less than one-third.
Why are small and medium investors so opposed to the acquisition plan? A Shanghai-based brokerage investment bank analyst analyzed 21st Century Business Herald. There are several reasons for this. The acquisition is based on a full-share payment. The dilution of small and medium-sized investors is very serious. Secondly, the additional price of 15.57 yuan/share is too low. Many institutions have lower shareholding costs, and institutions will think that their own interests are damaged. In addition, some shareholders have doubts about Gree's acquisition of Zhuhai Yinlong's strategy of transforming.
So, did Gree’s acquisition of Zhuhai Yinlong pass? On October 31, Shenzhen Stock Exchange also issued a letter of concern to Gree Electric Appliances, requesting a clear explanation of whether the proposal for the issuance of shares to purchase assets was deemed to have been passed as a whole. If yes, please further explain whether it complies with the “Regulations on the Management of Major Assets Restructuring of Listed Companies†by the China Securities Regulatory Commission. The relevant provisions of Articles 23 and 24. Explain the follow-up arrangements for this transaction, including but not limited to whether the company continues to promote the transaction plan, whether it intends to make adjustments to the plan, whether the relevant adjustment constitutes a major adjustment, whether the company intends to re-execute the review process, etc., and clearly states the follow-up arrangements Whether it meets the requirements of the Regulations on Restructuring Management.
On October 30th, an institutional investment director who participated in the Gree Electric Board Secretary’s Telephone Conference told the 21st Century Business Herald: “Don’t say that the Shenzhen Stock Exchange has inquired. It’s also very embarrassing at the telephone conference. It’s not a bad idea to say that this plan is over."
However, Gree Electric WeChat public account published an article at 7:00 on October 31, saying: "Ultimately, after the on-site shareholder vote and online voting, both of them passed the Gree issue of shares to acquire Zhuhai Yinlong with more than 2/3 of the votes. The proposal, which means that Gree's acquisition of Yinlong cross-border new energy field has won strong support from the shareholders' meeting. Gree's performance indicators in the third quarter have performed well, which is undoubtedly another good for investors to successfully acquire Yinlong. ""
A senior investment banker in Beijing holds different views on this. He told the 21st Century Business Herald: "The proposal on the company's issuance of shares to purchase assets and raise matching funds and related transactions in compliance with laws and regulations" The general meeting of shareholders can not pass, how to issue the future legal opinions? "The bill of the "Zhuhai Gree Electric Co., Ltd. issued shares to buy assets and raise matching funds and related transactions report (draft) revised draft and its summary" The plan is no longer, and there is no way to advance it. It can only be changed and the plan will be re-elected."
Changchun Securities analyst Xu Chun also said: "There are two different interpretations from the announcement: the first is the asset acquisition proposal but the supporting financing plan is rejected, and the second is asset acquisition and supporting financing. The plan was rejected; as many of the proposals submitted by Gree for consideration were cross-cutting proposals, any veto may have a material impact on other proposals; although the second proposal and its details concerning asset acquisition were passed. However, the multiple cross-cutting proposals, such as Proposal I, Proposal Seven and Proposal Eight, have not been approved. This means that all the proposals required for the acquisition of Yinlong have not been passed, which makes the differences in the interpretation of the existence of the motion; At present, we judge that the asset acquisition and supporting financing schemes should be rejected."
Risk retreat and multiple strategiesIt is also believed that the acquisition plan has been substantially rejected by Chen Ziyi, an analyst at Haitong Securities. "As a result of the motions as a precondition for the motions of the first and the seventh, we believe that this actually means that the plan as a whole is rejected. The follow-up management needs to re-revise the proposal, re-convene the board of directors, the general meeting of shareholders, and re-fulfill the legal process." Chen Ziyi said.
However, he also believes that the impact of the acquisition plan on Gree's share price is positive.
In the research report, he pointed out that the short-term uncertainty is eliminated, and the concern of the company returns to the business situation of the main business, which is also in line with the interests and expectations of value investors who have been following the growth of Gree. Moreover, the current market estimates of Gree's market value imply the factors of additional dilution, and whether the plan is expected to bring about a revaluation. As for whether the follow-up is to modify the plan or to abandon the acquisition, from the current market reaction, there will be no negative impact on the stock price. Because the newly revised plan is bound to outperform the original one, it can be seen that the biggest dissatisfaction of the shareholders is mainly due to the dilution of the minority shareholders' equity rather than the acquisition of Yinlong, so we believe that management It is more likely that the layer modification plan will continue to advance.
In addition, the above-mentioned institutional investment director who participated in the conference also said to the 21st Century Business Herald: "I personally believe that Gree will continue to promote the acquisition of Zhuhai Yinlong, which is inevitable due to its diversified expansion strategy. The air-conditioning market Gree has basically reached the ceiling, and it is difficult to further improve. At the same time, the three quarterly reports show that the previously barbaric insurance has begun to retreat. We expect that Dong Mingzhu will not strengthen the controlling share again, and will not rule out The possibility of strengthening."
According to Gree Electric's third quarterly report, only the top ten shareholders are Qianhai Life Insurance Co., Ltd. Haili's annual products, holding 59.74 million shares, compared with 30.36 million shares in the second quarter, Harmony Health Insurance Company's general insurance products It has all been cleared, and its holdings in the second quarter were 48.19 million shares. At the same time, China Securities Finance Co., Ltd. also reduced its holdings of 8.6 million shares compared with the second quarter, and held 171 million shares in the third quarter.
In the third quarter of 2015, the company became the third largest shareholder of Gree Electric Appliances. Oriental Fortune Choice showed that Gree Electric's average price per share in the third quarter of 2015 was 23.92 yuan/share, while in the third quarter of 2016, Gree Electric's per share was The price is 22.43 yuan / share, if this is calculated, the securities company currently holds or has a floating loss of about 200 million yuan.
Dong Mingzhu's words: Gree must expandOn-site Zhu Yinlong Chairman Wei Yincang responded in detail to many questions about Yinlong's technology and market share. At the same time, Dong Mingzhu, chairman of Gree Electric Appliances, also responded to key issues including excessive acquisition premium and diluting shares.
Wei Yincang said at the shareholders meeting: "We are not relying on an order for the media to question the order. We can't buy our new energy car this year. Now we have all 13 hours of work, staying up all night. Production, next year's orders have also been filled in the first half of the year. Not the higher the energy density, the better, to consider more safety, cost performance, regulatory requirements, etc., the state requires energy saving and emission reduction, low energy consumption, the most demanding of all cars in the new energy automotive industry The technology is a bus. No car is as demanding as a bus. It is unscientific and unreasonable to use a single energy density to make a bus.†For the comparison between Zhuhai Yinlong and BYD, Wei Yincang Said that you need to ask the market customers to reflect that they are not good at evaluating their opponents.
Dong Mingzhu explained the issue of equity dilution: "Many people don't understand that their equity is diluted. They only look at the problem from a single perspective. We think Zhuhai Yinlong is an undiscovered gold. From a technical perspective Zhuhai Yinlong's technology is unique in China. This acquisition is even more powerful for Gree. Gree has a 40% share of air conditioners and has little room for growth. It is also difficult for gods to expand. The profit is 6% to 13%, which is very good for investors. If you invest, you will invest that amount of money. The real benefit is the team of this management team."
Dong Mingzhu then published his views on speculative stocks: "I don't think stocks can be fired. I don't serve speculators. I serve investors. The investment Gree should be based on whether this company can develop for 100 years. There are also a lot of funds today. You can go to speculate other stocks, but Gree will not do this. Our stock market is very important to the stability of the society. When one day your stock is high, the people who have thrown away the picks are very important. Think? So we try to create an environment for everyone to invest in the long term."
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