35% Premium for A-share Company Buyout.
Yanhu Shares (000792) announced this evening that the actual controller of the company, Qinghai Provincial Government State-owned Assets Supervision and Administration Commission (SASAC), and the controlling shareholder, Qinghai Guotou, have signed the "General Cooperation Agreement on the Establishment of China Salt Lake Group" with China Minmetals and its subsidiaries. According to the agreement, Qinghai Provincial Government SASAC, Qinghai Guotou, and China Minmetals plan to jointly establish China Salt Lake Industry Group Co., Ltd. (hereinafter referred to as "China Salt Lake Group").
At the same time, China Salt Lake Group intends to purchase 681 million shares of Yanhu Shares held by Qinghai Guotou and its person acting in concert, Wuhu Xinze Qing, with cash. If the transfer is completed, the controlling shareholder of the company will change from Qinghai Guotou to China Salt Lake Group, and the actual controller will change from Qinghai Provincial Government SASAC to China Minmetals.
The parties have negotiated and confirmed that the transfer price of the Yanhu Shares held by Qinghai Guotou and its person acting in concert, Wuhu Xinze Qing, is tentatively set at 13.558 billion yuan. The final transfer price of the Yanhu Shares held by Qinghai Guotou and its person acting in concert, Wuhu Xinze Qing, shall be subject to the approval of the competent state-owned assets supervision and administration department.
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Based on the 681 million shares, the acquisition price of this time is 19.9 yuan per share, which is a 35% premium compared to the closing price of the last trading day. Currently, the market value of Yanhu Shares is 80 billion yuan. Based on the acquisition of this part of the equity, China Minmetals values Yanhu Shares at 108.1 billion yuan.
China Salt Lake Group invests 13.558 billion yuan to acquire this part of the equity, accounting for 12.54% of the total share capital of Yanhu Shares. Due to multiple dilutions such as additional issuances and debt-to-equity conversions, the equity held by the major shareholders of Yanhu Shares has been continuously reduced.
The major shareholders of Yanhu Shares are mainly financial institutions such as banks, holding shares through debt-to-equity conversion and other methods. Due to the failure of diversified investments, Yanhu Shares had once been suspended from the market for several years. Later, it resumed listing with the improvement of the industry and the recovery of profitability after debt-to-equity conversion. Although the major shareholders do not hold much equity, they still firmly control the management rights.
China Salt Lake Group controls Yanhu Shares at a high premium, thereby obtaining the management rights of Yanhu Shares.
The registered capital of China Salt Lake Group is 10 billion yuan, and the equity structure is planned to be: China Minmetals holds 53.00%; Qinghai Provincial Government SASAC holds 18.73%; Qinghai Guotou holds 28.27% (the aforementioned registered capital and equity ratios are tentative, and the final situation shall be subject to the actual situation of the establishment of China Salt Lake Group).
Local state-owned assets account for 47% of the total share capital. Although they are minority shareholders, their equity ratio is not low. By jointly establishing a new company to purchase Yanhu Shares, local state-owned assets continue to indirectly hold the equity of Yanhu Shares and can also cash out a large amount of cash from this transaction.
China Minmetals has invested in the salt lake industry in Qinghai, and its affiliated Minmetals Salt Lake Co., Ltd. was established in September 2009, with the production plant located in the Yili Ping Salt Lake in the central part of the Qaidam Basin. Currently, a 10,000-ton/year lithium carbonate project and a 300,000-ton/year potassium chloride project have been built and put into operation. The main products include battery-grade lithium carbonate, potassium chloride, lithium phosphate, etc. Among them, the production scale of lithium carbonate ranks second in domestic salt lakes, and the production scale of potassium chloride reaches the second echelon in the country. This scale is still relatively small compared to Yanhu Shares.An insider from Minmetals Salt Lake has stated that Minmetals Salt Lake has been incorporated into China Salt Lake Group. Minmetals established the China Salt Lake Group and acquired shares of Salt Lake Corporation, recognizing the strategic significance of local resources, particularly potash and lithium.
He indicated that after this acquisition by China Minmetals, they will gain a controlling voice, participate in the management, and make arrangements in areas such as personnel appointments.
Previously, Sinochem, also a state-owned enterprise, became a significant shareholder of Salt Lake Corporation through a rights issue, but later reduced its holdings. The aforementioned insider from Minmetals Salt Lake mentioned that Sinochem is a production company, while Minmetals focuses on mineral development and has experience in this area, which makes a significant difference between the two.
By the end of 2021, the People's Government of Qinghai Province introduced the "Qinghai Action Plan for Building a World-Class Salt Lake Industry Base (2021-2035)," which mentioned phased targets. By 2025, the salt lake industry output value is expected to exceed 34 billion yuan, with initial success in the construction of a world-class salt lake industry base. By 2030, 2 to 3 leading enterprises with sales revenues over ten billion yuan will be cultivated, the salt lake industry output value will reach 70 billion yuan, and the construction of a world-class salt lake industry base will take shape. By 2035, the salt lake industry output value will reach 120 billion yuan, and the world-class salt lake industry base will be essentially established.
By the end of 2022, the People's Government of Qinghai Province publicly released the "Several Measures to Accelerate the Construction of a World-Class Salt Lake Industry Base and Promote the High-Quality Development of the Salt Lake Industry." The document explicitly proposes to "accelerate the formation of China Salt Lake Group." It details the establishment plan for China Salt Lake Group, aiming to introduce large state-owned enterprises and integrate related companies to form China Salt Lake Group, under the premise of market demand, resource availability, technological maturity, and economic feasibility, to establish a priority supply and collaborative cooperation mechanism between upstream and downstream enterprises within the group.
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