Orient and Shanghai Securities Merge to Form Regional Brokerage Giant

Two major brokerage firms managed by the Shanghai municipal government have finalized a merger and restructuring plan aimed at creating a leading securities company with a strong brand and extensive regional market presence.

The acquiring firm will purchase all shares of the other company using a combination of newly issued stock on the Shanghai Stock Exchange and cash payments, announced yesterday.

The new shares will be issued at CNY10.49 (approximately USD1.45) each, about 12% higher than the company’s closing price of CNY9.34 (around USD1.29) on April 17, the last trading day before trading suspension due to the planned deal.

Post-transaction, the core operations of the acquiring company will remain unchanged. Its total assets are expected to increase by 21% to CNY5.8 trillion (roughly USD807.1 billion), while net assets will exceed CNY1 trillion (roughly USD138.5 billion). The company’s industry ranking in the country is projected to improve from 11th to 10th place.

The combined entity will operate approximately 250 branches, including 79 in Shanghai. Both companies boast strong business foundations and customer bases in eastern China and Shanghai, which is expected to generate synergies across their main operations.

In response to regulatory encouragement for financial institutions to enhance their core competitiveness through mergers and acquisitions, consolidation within China’s securities industry has gained momentum.

M&A activities are reshaping the competitive landscape of domestic securities firms, said a senior analyst at a prominent financial research firm. Mergers are increasingly viewed not just as optional strategies but as essential for future growth.

Most of these mergers fall into two categories: consolidations between firms under the same controlling shareholder and mergers between brokerages in the same region, according to recent and ongoing cases.

For example, a leading securities firm began an acquisition merger last November involving two other firms, all backed by a major sovereign wealth fund. This deal has elevated the firm’s industry ranking from sixth to fourth place.

Meanwhile, two prominent Shanghai-based firms, one ranked second and the other fifth in the industry, launched a merger and restructuring plan in September 2024. This merger has resulted in the largest brokerage in China.

Additionally, the recent merger between two securities firms headquartered in Jiangsu Province marked the first such deal this year in the industry.

The shares of the company involved in the merger initially surged up to 6%, closing the day up 2.1% at CNY9.54 (around USD1.40). Its Hong Kong-listed shares fell 5.9% to HKD6.05 (about USD0.77) after earlier increasing by 2% during the trading session.