From competition to merger: Why did two brokerages in Jiangsu come together?
In June, a draft report put an end to months of rumors about the integration of securities firms. Dongwu Securities officially disclosed a plan to issue shares and pay cash to acquire assets, proposing to acquire 83.68% of the equity of Donghai Securities for 11.519 billion yuan. Thus, this highly - anticipated integration case of provincial securities firms has officially entered the substantial implementation stage. The withdrawal of the original counter - party, Changzhou Taichen Guarantee Investment Co., Ltd., slightly adjusted the proportion of the target shares from 83.77% to 83.68%. This adjustment of the plan does not constitute a major adjustment, and the progress of the transaction remains stable.
As the first merger of state - owned comprehensive securities firms from different cities in the same province in the Chinese securities industry, this transaction is not simply an addition of assets but a carefully calculated regional resource reorganization. When the investment banking gene of Suzhou meets the resurgent wealth management and fixed - income characteristics of Changzhou in recent years, behind the price of 11.5 billion yuan is a "dual - core jigsaw puzzle" attempting to piece together the financial map of the Yangtze River Delta. However, the seamless fit of the jigsaw puzzle never lies in the paper plan but at the approval stage and in the deep - water area of integration.
A 11.5 - billion - yuan leap in scale: Complementary financial foundation and business with different focuses
Breaking down the core terms of the draft, the most intuitive is the step - by - step leap in financial scale. Taking December 31, 2025, as the assessment benchmark date, the market - based assessment value of 100% of Donghai Securities' equity is 13.765 billion yuan, with a value - added rate of 40.76%. According to the pro - forma data disclosed in the draft, after the completion of the transaction, the total assets of Dongwu Securities will soar to 282.808 billion yuan, an increase of 30.80%; the owner's equity will also increase to 56.921 billion yuan, an increase of 30.08%; the operating income will increase to 10.894 billion yuan; and the net profit attributable to the parent company will increase to 3.688 billion yuan. Although the expansion of the share capital dilutes the basic earnings per share from 0.71 yuan to 0.60 yuan, the company has formulated supporting measures to make up for the return and promised to effectively protect the rights and interests of minority shareholders. Of the consideration of 11.519 billion yuan, 10.786 billion yuan will be paid by issuing shares at a price of 9.46 yuan per share, and only 732 million yuan will be in cash. This "mainly shares, supplemented by cash" structure not only eases the immediate cash - flow pressure of the listed company but also deeply binds the interests of the original shareholders of Donghai Securities to the new merged platform.
The deeper logic lies in the complementary business endowments. Dongwu Securities has built a moat in investment banking, bonds, research, and proprietary trading; while Donghai Securities, whose predecessor can be traced back to Changzhou Securities in 1993, after experiencing a performance trough in 2023, successfully turned losses into profits in 2024 and formed differentiated characteristics in business sectors such as wealth management, futures, and derivatives, showing a strong recovery momentum. The merger of the two companies avoids the red ocean of homogeneous competition and is expected to form a synergistic closed - loop of "investment banking traction + wealth management reception + fixed - income foundation". In the current situation where the securities industry is "big but not strong" and the Matthew effect is intensifying, this kind of integration based on regional characteristics and business strengths is more practical than blindly pursuing a national license. It initially stitches together the customer pools, product libraries, and research networks of the two institutions through capital ties, laying a physical foundation for subsequent cross - selling and customer - group stratified operation.
The synergy logic from "Jiangsu regional integration" to a "Yangtze River Delta flagship"
The macro - narrative of this merger case is always closely linked to the pulse of regional economy. Suzhou and Changzhou, both important economic cities in southern Jiangsu, are geographically close and have interconnected industries, but their financial needs have long been served by two independent securities firms. After the merger, the new company will be mainly based in Suzhou and cooperate with Changzhou to form a dual - city operation pattern. The density of business outlets and customer coverage in southern Jiangsu will achieve seamless connection. The announcement clearly states that the integration is a key step in implementing the company's development strategy, serving the construction of a strong financial province in Jiangsu, and the national strategies of the Suzhou - Wuxi - Changzhou metropolitan area and the Yangtze River Delta integration. The Yangtze River Delta is home to a large number of high - tech manufacturing and biopharmaceutical enterprises and high - net - worth individuals, and the demand for full - life - cycle financial services is growing exponentially. A local securities firm flagship with increased scale and a complete license will have pricing power and resource - scheduling capabilities that a single entity could not achieve in the past when undertaking local government bonds, IPOs of science and technology enterprises, and cross - border wealth management.
From the perspective of regulatory orientation, this transaction also precisely hits the policy rhythm of supporting industry mergers and acquisitions, and is a specific practice of the policy of "one main securities firm per province" in Jiangsu. Since the actual controller remains the State - owned Assets Supervision and Administration Commission of Suzhou, the corporate governance structure remains continuous and stable. In the cycle of accelerating industry concentration, the merger of Dongwu and Donghai actually explores a differentiated breakthrough path of "deeply cultivating the local market and radiating the Yangtze River Delta" for regional securities firms. The future competitive landscape of the securities industry is accelerating the evolution towards a dual - structure of "national - level leading + regional - level leading". Dongwu's move this time attempts to build a solid moat between aircraft - carrier - level securities firms and long - tail small and medium - sized institutions through government - enterprise relationships, outlet density, and industrial understanding.
The approval hurdle and the integration challenge: The real test after the draft is finalized
However, the disclosure of the draft is just the starting point of a long journey. From paper synergy to actual profit, there are two hurdles that must be crossed.
The first is the uncertainty of regulatory approval. Although this transaction has been reviewed by the board of directors, it still needs to pass multiple thresholds, including the shareholders' meeting vote, approval from state - owned assets supervision, review by the Shanghai Stock Exchange, and registration by the China Securities Regulatory Commission. Each approval focuses on different core requirements: state - owned assets value asset preservation and appreciation, regulators examine the fairness of valuation and the protection of minority shareholders' interests, and the exchange focuses on the realizability of synergistic effects. During the long approval window period, market environment fluctuations or wrangling over inquiry details may become variables.
The second is the more difficult "post - merger integration". The success or failure of a merger depends 70% on integration. In the global cases of failed mergers, more than 80% are directly or indirectly due to the failure of post - merger enterprise integration. Dongwu and Donghai have developed independently for more than 30 years and have formed their own corporate cultures, assessment mechanisms, and IT systems. How to smoothly connect heterogeneous trading, clearing, and CRM systems? How to prevent the loss of core investment banking teams and star investment advisors during the structural reorganization? How to balance the salary systems and risk - control standards in the two places? The connection of IT systems usually takes more than a year, and the parallel operation during this period will increase operating costs; and the layoff and merger of overlapping business departments will inevitably touch the existing interest pattern. Any slowdown in cultural conflict, system migration, or talent loss risk may discount the vision of "1 + 1>2".
When rivers converge, there are bound to be hidden reefs and backwaters. The merger draft of Dongwu Securities and Donghai Securities provides a high - definition sample for the regional integration of the Chinese securities industry. However, the organizational reshaping and internalization of capabilities of a securities firm can only be polished bit by bit with time and patience. When the approval seals are stamped one by one, the real test is just beginning. What's your opinion? Let's discuss in the comment section.
This article is from the WeChat official account "Investor Network - Thinking Finance", author: Jiang Ji. It is published by 36Kr with authorization.