Integral wave of turmoil: BDO Runda Lighting

After the agreement signed by BDO Runda to acquire equity of Wu Changjiang, BDO Runda will hold a 20.05% stake in NVC Lighting, becoming the largest shareholder of NVC Lighting; SAIF Asia and Germany Schneider Electric They are the second and third largest shareholder of NVC, holding 18.48% and 9.21% of shares; Wu Changjiang still holds 6.79% of NVC shares.

China's LED lighting industry mergers and acquisitions wave quietly hit, or is Wu Changjiang after NVC lighting after the storm subsided?

Last night (26th), BDO Runda, one of the largest LED chip production enterprises in China, announced that it will spend approximately HK$1.65 billion to acquire approximately 20% of China's largest lighting company NVC Lighting, becoming the largest shareholder of NVC Lighting.

The announcement also revealed that the founder Wu Changjiang transferred about 11.8% of NVC Lighting's equity to BDO Runda in his hands, but he still holds a 6.79% stake. Last night, a reporter from the "First Financial Daily" telephoned NVC Lighting Chairman and Asia Pacific partner of Saife, but as of this writing, no response has been received.

At the same time, BDO Runda plans to issue shares non-publicly, and the company's controlling shareholder and Wu Changjiang will subscribe, among which Wu Changjiang will subscribe 130 million shares. The industry estimates that Wu Changjiang may become the second largest shareholder of BDO Runda after it becomes a shareholder.

The "marriage" between BDO Runda and NVC Lighting can be described as a warmth in the "cold winter" of the LED lighting industry. Complementary to each other, you can open up the LED lighting industry, the entire industry chain.

HK$1.65 billion bought the largest shareholder

From December 11 to December 21, 2012, BDO Runda passed the wholly-owned subsidiary BDO Runda International (Hong Kong) Co., Ltd. (hereafter referred to as "HK BDO Runda") for on-site and off-exchange transactions. In an approach, it spent approximately HK$700 million to acquire approximately 260 million ordinary shares of NVC Lighting, representing 8.24% of the total shares of NVC Lighting.

On December 26th, BDO Runda Hong Kong and Wu Changjiang’s wholly-owned subsidiary NVC Inc. The signing of the share transfer agreement is expected to spend approximately HK$950 million at the price of HK$2.55 per share to acquire NVC Inc. NVC Lighting held approximately 373 million common shares, representing 11.81% of the total number of NVC Lighting shares.

The above transaction enabled BDO Runda to spend a total of HK$1.65 billion (approximately RMB 1.34 billion) to hold a 20.05% stake in NVC, which will become NVC Lighting's largest shareholder.

BDO Runda said that the acquisition of NVC Lighting's equity is to seek a strategic cooperation with NVC Lighting, using their respective advantages to enlarge and strengthen the LED lighting industry, not to obtain the securities investment behavior of the secondary market spread.

Wu Changjiang currently directly and indirectly holds a 18.60% stake in NVC Lighting. After the above equity transfer, Wu Changjiang directly and indirectly holds a 6.79% stake in NVC Lighting. Wu Changjiang and NVC Inc. Commitment to grant BDO Runda the right of first refusal to transfer such shares to BDO Runda at a price of HK$2.95 per share at Bund Runda’s discretion.

Wu Changjiang shares in BDO Runda Tak Runda

On December 25, the Board of Directors convened the board of directors to agree to the above-mentioned share purchase, and at the same time passed the proposal of non-public issuance of shares.

According to an announcement last night, BDO Runda will issue 230 million shares non-publicly at a price of 5.86 yuan/share, of which Wuhu Dehao Investment Co., Ltd. (holding 21.04% stake in BDO Runda) is going to subscribe. 100 million shares, Wu Changjiang subscribed 130 million shares. The RMB 1.35 billion raised will be used to supplement BDO Runda's liquidity.

A person close to BDO Runda told the reporter of the “First Financial Daily” that if the non-public issuance scheme is implemented, Wu Changjiang may become the second largest shareholder of BDO Runda.

BDO Runda now has a complete industrial chain from LED epitaxial wafers, chip-package-applications (lamps, display screens), and has strong LED lighting product R&D and manufacturing capabilities. NVC Lighting has a complete customer service network with 36 operation centers and more than 3,000 brand stores in the country.

BDO Runda said that after investing in NVC Lighting, it will enter its board of directors and actively seek cooperation with NVC Lighting in the promotion of LED lighting products in order to use its complete channels to sell LED lighting products.

Grab NVC Lighting Board?

Wu Changjiang told the reporter last night: “I’ve always been concerned about LED. NVC must make a difference in LED lighting. This is my wish.” Ding Runda, director of Deng Fei, believes that cooperation between large companies , Integration is the only way for the LED industry from scattered to standard. BDO Runda and NVC Lighting have complementary advantages. This capital cooperation is the beginning of industry consolidation.

Zhang Xiaofei, president of the High-tech LED Industry Research Institute, analyzed with the reporter that the lighting industry is moving to LED. NVC Lighting lacks LED upstream resources, while BDO Runda lacks downstream channel resources. The marriage between the two can be complementary, and will The industry has a big impact, and it may set off a new wave of mergers and acquisitions in the LED lighting industry.

NVC Lighting just stepped out of the fight this year. Xu Hua, an associate professor at the School of Economics at Central University of Finance and Economics, believes that the equity transaction is likely to be Wu Changjiang’s desire to introduce major shareholders to suppress the “deterrence system”.

According to the current disclosure information of the Hong Kong Stock Exchange, Schaeffler Asia and Germany Schneider Electric are the second and third largest shareholders of NVC, holding 18.48% and 9.21%, respectively.

“Wu Changjiang is controlled by people in NVC Lighting, this time agreeing to sell a large amount of equity, may be hoping to restructure the board of directors in this way, to disperse, eliminate the management of Schneider and Schneider. In addition, Wu Changjiang may also be because of the Runda has a good relationship and has become a professional manager with small equity. Wu Changjiang is only slightly less likely to cash out for this purpose.” Xu Hua said.

BDO Runda also stated that it holds a 20.05% stake in NVC Lighting, and will use the equity method for accounting. The profit of NVC will be included in the company's consolidated statements according to the proportion of equity held by the company to enhance the company's Profitability, and follow-up company does not rule out the possibility of further increase NVC Lighting shares.