Jia Yuan Law Offices, DeHeng Law Offices, and Zhong Lun Law Firm assisted the spin-off of six design institutes from China Communications Construction Company (CCCC) and China Urban and Rural Holding Group, which once finalised will mark the completion of a reverse takeover.
CCCC and China Urban and Rural will spin off their six design institutes under an acquisition agreement with A-share listed Qilianshan Cement Group. A reverse takeover is when a privately-held company acquires enough shares of a publicly-traded enterprise to gain controlling interest, allowing it to become a publicly traded company without undergoing an IPO.
Jia Yuan acted as legal counsel for both parties involved in the transaction, led by senior partners Shi Zhenjian and Yan Guozhe, along with partner Liu Zhuoli. Senior partner Li Xinjun provided merger filing support to the team.
DeHeng’s founding partner Wang Li and partner Bi Yumei advised CCCC and China Urban and Rural Holding Group.
Partner Li Hairong from Zhong Lun acted as legal counsel for the sole financial adviser, CITIC Securities.
The CCCC, a Hong Kong-listed company, and China Urban and Rural are subsidiaries of the central enterprise China Communications Construction Group, while Qilianshan is a subsidiary of the central enterprise China National Building Material Group. As a result, this transaction is also considered the first backdoor listing of central enterprises between the A-share and H-share markets.
The transaction is structured into three stages. The first stage involves a major asset swap, where shell company Qilianshan transfers all its cement assets and liabilities, valued at RMB10.43 billion (USD1.45 billion), to China Communications Construction Group in exchange for the six design institutes valued at RMB23.5 billion.
The second stage entails Qilianshan issuing shares as payment to the CCCC and China Urban and Rural, resulting in 62.35% of the combined shareholding. This arrangement establishes the China Communications Construction Group as the actual controller of Qilianshan.
Finally, Qilianshan will raise RMB2.26 billion through a non-public offering of shares.
On completion of the transaction, Qilianshan will bid farewell to the cement business and become the largest listed company in China specialising in engineering survey, design and consulting, with China Communications Construction Group as its actual controller.
According to the agreement, although Qilianshan’s cement assets will be transferred to China Communications Construction Group, they will ultimately be managed by Tianshan Cement, a subsidiary of China National Building Material Group.