Caixin Financial News, September 25th (Reporter: Wang Biwei) Currently, the capital market mergers and acquisitions are entering a "active period". Tonight, an announcement of a planned acquisition once again attracted market attention. H.B. Fuller (301297.SZ) announced that it is planning to acquire the semiconductor-related assets of its indirect controlling shareholder, FERROTEC Group (Ferrotec Holdings Corporation of Japan). Besides H.B. Fuller, FERROTEC Group currently also holds controlling stakes in three semiconductor enterprises domestically, all of which are larger than H.B. Fuller. If the new assets can be successfully injected, it is expected to have a significant impact on H.B. Fuller's performance and the performance of the capital market.

H.B. Fuller announced tonight that the company is planning to acquire the semiconductor-related assets of its indirect controlling shareholder, FERROTEC Group, by issuing RMB common stock, convertible corporate bonds, cash (if available), etc. This transaction is expected to constitute a major asset restructuring, and also a related-party transaction. The company's stock will be suspended from the market opening on September 26, 2024. The expected suspension period is not more than 10 trading days.

H.B. Fuller's main business is to provide one-stop precision cleaning services for semiconductor and display panel manufacturers. Due to its business scope in providing precision cleaning services for equipment like solvents and photoresists in the lithography process, it is often defined in the market as the 'lithography concept'.

According to Tianyancha, Shanghai Shenhe Investment Co., Ltd. currently holds 50.24% of H.B. Fuller's shares, being the company's controlling shareholder; while Ferrotec Holdings Corporation of Japan (i.e. "FERROTEC Group") holds 100% equity of Shanghai Shenhe Investment Co., Ltd., being H.B. Fuller's indirect controlling shareholder.

In addition to H.B. Fuller, FERROTEC Group also controls three semiconductor industry companies domestically. They are Zhongxin Semiconductor, Shunsun Polycrystal Core, and H.B. Fuller China. The above three companies have all expressed intentions for IPOs, but none of them have yet landed on the capital market.

Zhongxin Semiconductor, which is engaged in the research, development, production, and sales of semiconductor wafers, terminated its IPO application in July this year. The company has always faced questions about profitability on its IPO journey. Its revenue from 2019 to the first half of 2022 was 387 million yuan, 425 million yuan, 823 million yuan, and 7.02 billion yuan, respectively, with corresponding losses of 176 million yuan, 424 million yuan, 317 million yuan, and 75.1788 million yuan during the same period.

Shunsun Polycrystal Core, engaged in the research, development, production, and sales of silicon components and quartz crucibles, suspended its IPO in March this year, resubmitting its prospectus in June. The company achieved a revenue of 1.316 billion yuan and a net profit of 0.247 billion yuan in 2023, but has faced questions due to a high proportion of related-party transactions.

H.B. Fuller, whose main business is the research, development, production, and sales of power semiconductor substrates, signed a listing guidance agreement in 2022 and completed the guidance filing. However, the company has not yet submitted its prospectus. The company's revenue in 2023 was 1.7 billion yuan. Therefore, these three companies all face high difficulties in entering the capital markets in the short term.

In tonight's announcement, H.B. Fuller did not provide detailed plans, so it is still unclear whether the acquisition target is one or multiple companies. However, it can be confirmed that the revenue levels of these three companies are above H.B. Fuller's (2023 revenue of 0.594 billion yuan). The performance of H.B. Fuller will be greatly affected by the injection of new assets. In addition, as of the close on September 25, H.B. Fuller's total market value was 7.045 billion yuan, and the injection of new assets is also expected to boost its market performance.

Recently, regulators have been positive about listed companies engaging in cross-industry mergers and acquisitions with a focus on transformation and upgrades, as well as acquiring non-profitable assets. However, as this acquisition is still in the planning stage, its success remains to be further observed.

A capital markets lawyer told reporters that in acquisition cases involving significant asset restructuring, the qualifications of the targets, the pricing of the acquisitions, and regulatory opinions could all impact the progress of the M&A cases.