(Yicai Global) Nov. 2 – The Shenzhen Stock Exchange has launched an official enquiry into the proposed acquisition of Zhuhai Yinlong Energy Co. by Gree Electric Appliances [SHE:000651], China's biggest air-conditioner maker, leaving industry analysts baffled.
Gree announced back in August that it would acquire a 100 percent stake in Zhuhai Yinlong New Energy Co., Ltd, a lithium battery manufacturer, for CNY13 billion (USD1.95 billion), through private placement.
Shenzhen's stock exchange approached Gree to express its concerns about the acquisition, demanding a clarification as to whether the proposed asset purchase through share offering has been approved.
If approved, the company was required to disclose relevant follow-up arrangements after the acquisition.
On Oct. 28, Gree held a shareholders' meeting to vote on two matters, the first, a CNY13 billion private share placement for the acquisition of Yinlong, the second, to raise CNY9.7 billion of matching funds.
The meeting was secretly filmed and shows Gree chairman Dong Mingzhu, widely known as 'Sister Dong' and famed for her headstrong nature shouting at shareholders. It has since gone viral on Chinese social media. The CNY9.7 billion matching funds plan was voted down, but the acquisition framework agreement was passed.
It remains unclear as to whether the motion to acquire Yinlong at the price of CNY13 billion has been approved or not.
"Lawyers believe that the acquisition plan has been approved, but the method of raising matching funds needs to be adjusted. However, most analysts and investment banking professionals argue that given the overlap between the two proposals, the partial rejection means that the entire plan is no longer viable, in other words, the acquisition has been voted down by the shareholders," our Yicai Global reporter was told by one of many experts they interviewed in relevant fields.