Guotai Junan and Haitong Securities to merge in mega-deal

Chinese brokerages Guotai Junan Securities (SSE:601211) and Haitong Securities (SSE:600837) have announced a merger agreement, creating a financial powerhouse. The deal, structured as a share exchange, will see Guotai Junan absorb Haitong. The merger will involve Guotai Junan issuing both A-shares and H-shares to Haitong’s shareholders at a ratio of 1:0.62. Concurrently, Guotai Junan plans to raise up to RMB 100 billion (approximately USD 13.6 billion) in supporting funds from its controlling shareholder, Shanghai State-owned Assets Operation Co., Ltd. The deal will result in Haitong's delisting from both the Shanghai and Hong Kong Stock Exchanges. The combined entity's assets will exceed RMB 16 trillion (USD 2.2 trillion), creating one of the largest investment banks in China. The merger is subject to regulatory approvals.