High premium acquisition questioned

Following the opposition to Dali real estate’s introduction of two major projects, zhantou and Hainan International Center, the representatives of Yunnan Baiyao’s state-owned shareholders once again voted against Yunnan Baiyao’s capital increase and acquisition of equity of Anhui jinjianqiao Medical Technology Co., Ltd. (hereinafter referred to as “jinjianqiao company”). The reasons for objection are as follows: the financial situation of the target company (jinjianqiao company) is not good, the materials provided do not fully explain the market competitiveness of the target company’s products; the strategic intention, strategic synergy effect and strategic realization path of the investment target company to achieve absolute holding are not clear. < p > < p > “at the beginning, Yunnan provincial government hoped to introduce strategic investors through the mixed reform of Baiyao, build it into a large group with a scale of 100 billion, and take Yunnan Baiyao as the main chain to invest in Yunnan, so as to develop and expand Yunnan biomedical industry chain. The focus of Yunnan state-owned assets is more on the development and growth of the industry. However, after the entry of private shareholders, the development ideas of Yunnan state-owned assets have not been implemented, and the gap between the two sides is growing. ” On December 15, a person close to Yunnan SASAC told China Securities Journal that Yunnan state owned equity operation and Management Co., Ltd., the largest shareholder of Yunnan Baiyao, has repeatedly reported to Yunnan SASAC several problems existing in the equity management of Yunnan Baiyao. < p > < p > on December 11, Yunnan Baiyao announced that it plans to adopt the method of “capital increase + equity transfer”, with a total investment of 77.6 million yuan to obtain 70% equity of jinjianqiao company. Among them, Yunnan Baiyao plans to increase the capital of jinjianqiao company by 64.19 million yuan. After the capital increase, Yunnan Baiyao holds 57.22% of the equity of jinjianqiao company, and the registered capital of jinjianqiao company is changed to 25.9708 million yuan. After the completion of the capital increase, Yunnan Baiyao plans to transfer 12.78% equity of jinjianqiao company held by some shareholders for a consideration of 13.41 million yuan. The counterparties of equity transfer are Hefei Kexun Ruijian Technology Co., Ltd., Li Feng, Cao Liangming and Li Yang, with transfer ratios of 9.74%, 1.61%, 1.40% and 0.03% respectively. < / P > < p > according to the public information, jinjianqiao company is a high-tech enterprise jointly established by some teachers and researchers from China University of science and technology and Anhui University of traditional Chinese medicine. The company has long been committed to the modernization of traditional Chinese medicine clinical treatment technology, and has obtained four exclusive medical device product approval certificates, including simulation massage instrument, stroke rehabilitation instrument, breast treatment instrument and analgesia instrument. The simulation massage instrument has obtained the registration license of FDA class II medical devices. According to the audit report issued by zhongaudit Zhonghuan accounting firm, as of the transaction base date (June 30, 2020), the total assets, liabilities and net assets of jinjianqiao company are 8.9736 million yuan, 9.7005 million yuan and – 726900 yuan respectively. According to the appraisal of Zhongwei Zhengxin (Beijing) Appraisal Co., Ltd., as of the trading base date (June 30, 2020), the appraisal value of the target company’s net assets is 376600 yuan, that is, the total equity value of the shareholders is 376600 yuan. According to the income method, the total equity value of the target company’s shareholders is 48 million yuan. Finally, the income method result is selected as the final evaluation result, that is, the total equity value of the target company’s shareholders is 48 million yuan. < p > < p > Yunnan Baiyao said that jinjianqiao company has been deeply engaged in the field of rehabilitation medical devices for many years, and its core advantages lie in the intellectual property reserve of relevant technologies, distinctive product R & D pipeline, complete medical device R & D system and talent team. Through this equity investment, we will further integrate the rehabilitation equipment industry chain, effectively reduce production costs, improve R & D efficiency, and accelerate the development progress of new rehabilitation physiotherapy products such as acupuncture instruments; at the same time, we will give full play to the technical platform advantages of the target company, optimize resource allocation, and further enhance the market competitiveness of the company in the field of rehabilitation equipment. However, Wang Rong and Na Pengjie, directors of Yunnan Baiyao, believe that the financial situation of jinjianqiao company is poor, and the materials provided do not fully explain the market competitiveness of jinjianqiao company’s products; the strategic intention, strategic synergy effect and strategic realization path of the investment target company to achieve absolute holding are not clear. “Yunnan Baiyao is requested to make full profit forecast, study and judge, and demonstrate risks of investment projects. Please give full consideration to the relevant risks prompted by Beijing Deheng (Kunming) law firm, the legal adviser of Yunnan Baiyao, to ensure the shareholders’ equity. ” The worries of Wang Rong and Na Pengjie are not groundless. On the one hand, jinjianqiao company has been established for 14 years, and its financial situation is poor. Although it introduced state-owned shareholders during this period, it did not reverse the decline. On the other hand, “there are many competitors in the market of traditional Chinese medicine rehabilitation medical devices with limited technical content.” a senior person in Guangdong told China Securities Journal that the products of jinjianqiao company will face fierce market competition. The consideration of Yunnan Baiyao’s capital increase and acquisition of jinjianqiao company is questionable. < / P > < p > according to the data of the State Food and drug administration, jinjianqiao has the registration information of analgesia instrument, breast therapy instrument and imitation line products, all of which are “class II medical devices”. China Securities Journal reporter to “breast therapy instrument” as the keyword query found that in addition to jinjianqiao company, there are 8 domestic companies also registered similar products. < / P > < p > not only that, there are still some problems to be standardized in jinjianqiao company. Tianyancha data show that the ultimate beneficiary of jinjianqiao company is Cao Liangming, one of the counterparties of the transaction. Meanwhile, Cao Liangming holds 40% equity of “Hefei Qifu jupu Health Technology Co., Ltd.” (hereinafter referred to as “Qifu jupu company”). Qifu jupu company’s main product is “Qifu jupu intelligent simulation massage instrument”, but its product trademark “Qifu jupu” belongs to jinjianqiao company. < p > < p > Yunnan Baiyao did not mention the solutions to the above problems. The company said that based on the “legal risk tips” issued by the company’s legal adviser in the early stage, in the course of this transaction, there may be risks such as imperfect corporate governance structure, non-compliance of production and operation, and non-standard employment of the target company in some historical matters. The above risks are expected to be improved and solved after Yunnan Baiyao obtains the control of the target company in the future. < p > < p > on July 15 this year, Yunnan Baiyao plans to choose Xiangyuan Holding Group Co., Ltd. to carry out cooperation, and sign the “capital increase agreement on Yunnan Baiyao Dali Real Estate Co., Ltd.” with Shanghai Yuanye Industrial Co., Ltd., a subsidiary of Xiangyuan holding, to increase the capital of Dali real estate by 200 million yuan. At the board meeting at that time, according to the opinions of Yunnan state owned equity operation and Management Co., Ltd., Wang Rong and Na Pengjie, directors of yun’an Baiyao, also voted against it. The reason is: the strategic intention of introducing the enterprise is not clear. At the same time, Yunnan Baiyao plans to purchase professional liability insurance for all directors, supervisors and senior executives of the company. According to the opinions of Yunnan state owned equity operation and Management Co., Ltd., directors Wang Rong and Na Pengjie also voted against it. < p > < p > on October 30 this year, Yunnan Baiyao plans to invest 150 million yuan to set up Yunnan Baiyao Hainan International Center Co., Ltd. in Sanya City, as the main body of implementation to carry out the construction of Yunnan Baiyao Hainan International Center. Directors Wang Rong and Na Pengjie voted against the establishment of Yunnan Baiyao Hainan International Center Co., Ltd. for the following reasons: “in the case that the relevant policies, strategic synergy effect and strategic realization path conditions for the establishment of Yunnan Baiyao Hainan International Center Co., Ltd. are not clear, the board of directors should not consider it for the time being, and wait until the investment decision analysis, establishment conditions and environment are mature. Yunnan Baiyao should give full consideration to the strategic guidance of the provincial Party committee and the provincial government, predict the income of investment projects, study and judge the investment risks, clarify the path to achieve the investment objectives of the project, and ensure the shareholders’ rights and interests. ” In addition, director Li Shuangyou also voted against the proposal for the following reasons: “the feasibility study on the establishment of Yunnan Baiyao Hainan International Center Co., Ltd. is not deep enough and the basis for supporting decision-making is not sufficient.” < / P > < p > a person close to the SASAC of Yunnan told China Securities Journal that the Yunnan provincial government originally hoped to introduce strategic investors through the mixed reform of Baiyao, build it into a large group with a scale of 100 billion, and take Yunnan Baiyao as the main chain to invest in Yunnan, so as to develop and expand the Yunnan biomedical industry chain. “The focus of Yunnan’s state-owned assets is more on the development and growth of the industry, but after Chen Fashu entered, the development ideas of Yunnan’s state-owned assets have not been implemented, and the gap between the two sides is growing.” < p > < p > Chen Fashu has been coveting Yunnan Baiyao for a long time. In 2009, Yunnan Baiyao intends to introduce social capital, and its shareholder Hongta Group intends to transfer its equity. Xinhua Capital Group under Chen Fashu signed the equity transfer agreement with Hongta Group. However, in the implementation of the agreement, there were huge differences between the two sides. After Xinhua Capital Group paid 2.2 billion yuan for equity transfer, the counterparties decided to terminate the agreement, and the two sides also appealed to the court for this. In July 2014, Yunnan Provincial High Court announced that the equity involved in the transaction still belonged to Hongta Group, and the transaction money was returned in the original way. However, Chen was not reconciled. In 2015, he spent money in the name of himself and the company to buy the shares of Yunnan Baiyao from the secondary market, becoming the eighth and fourth largest shareholder of Yunnan Baiyao. < p > < p > in July 2016, Yunnan Baiyao announced the suspension of trading, saying that after receiving the notice of Baiyao holding, the controlling shareholder, the SASAC of Yunnan Province is planning to promote the reform of mixed ownership of Baiyao holding. Five months later, Yunnan Baiyao disclosed the mixed reform plan of Baiyao holding, and Xinhua Capital Group will obtain 50% equity of Baiyao holding, with a transaction consideration of 25.37 billion yuan. On June 11, 2018, Baiyao holdings made industrial and commercial changes, and Chen Fashu officially became the chairman of Baiyao holdings. On November 2, 2018, Yunnan Baiyao released the plan for absorption and merger of Baiyao holdings. On March 1, 2019, Yunnan Baiyao announced that the merger plan was approved by the CSRC. At present, xinhuadu group holds 24.37% equity of Yunnan Baiyao, Chen Fashu directly holds 0.70% equity of Yunnan Baiyao, and Yunnan state owned equity operation and Management Co., Ltd. holds 25.14% equity of Yunnan Baiyao. Yunnan Baiyao identified that the company had no actual controller. In fact, Yunnan state-owned assets have high hopes for the mixed reform of Yunnan Baiyao, which has become a sample of Yunnan mixed reform. The “Baiyao model” was once called the “Yunnan model” of mixed reform by the industry. However, after the honeymoon period, the differences between state-owned capital and private capital are increasing. According to a document submitted to Yunnan SASAC by Yunnan state owned equity operation and Management Co., Ltd. obtained by China Securities Journal, the company (Yunnan state owned equity operation and Management Co., Ltd.) deeply analyzed and summarized several problems existing in equity management of Yunnan Baiyao, such as lax implementation of proposal procedures, unclear purpose of related party transaction transfer, lack of in-depth analysis of investment valuation and transfer price There are some problems, such as the lack of rationality, the insufficient demonstration of the strategic layout, the unclear path to achieve the investment goal, and the insufficient consideration of the strategic guidance of the provincial Party committee and the provincial government. The company continues to strengthen the sense of responsibility of equity representatives, standardize their work procedures, and promote their attitude change. Yunnan Baiyao part of the board meeting case, because the company argued, firmly opposed, and put forward a professional, comprehensive analysis and sufficient basis, with the support of the superior leadership, successfully prompted Yunnan Baiyao to withdraw the relevant notice of the board of directors, firmly safeguarded the legitimate rights and interests of state-owned assets, effectively protected the safety of Yunnan Baiyao assets. On December 11, a reporter from China Securities Journal wrote a letter to Yunnan Baiyao on the acquisition of equity of jinjianqiao company and the differences between state-owned shareholders and private shareholders. As of press release, Yunnan Baiyao did not comment on the relevant issues.