Citic Securities to Acquire Local Rival in Expansion Push

(Bloomberg) -- Citic Securities Co. signed a preliminary agreement to buy smaller rival Guangzhou Securities, the latest in a series of acquisitions by China’s largest brokerage.

Citic Securities plans to fund the purchase by issuing shares to the current owners of Guangzhou Securities -- Hong Kong-listed Yuexiu Financial Holdings Group and one of Yuexiu’s wholly-owned units, according to a filing to Shanghai stock exchange.

Key insights

  • The acquisition is in line with Citic Securities’ strategy of expanding via asset purchases amid a market downturn, said Founder Securities Co. analyst Zuo Xinran
  • The latest acquisition will strengthen Citic Securities’ presence in southern China after its failed bid to buy a stake in GF Securities Co. in 2004
  • Shares of Chinese brokerages have plunged this year as retail investors flee the nation’s sinking stock market amid escalating trade tensions with the U.S.

More details

  • Citic Securities has acquired a number of brokerages, including Credit Agricole SA’s CLSA, Wantong Securities Co. and Goldstone Securities
  • Citic Securities will conduct due diligence on Guangzhou Securities and will hire financial and legal consultants to carry out the planned transaction, according to the filing
  • Trading of Citic Securities shares was suspended on Tuesday and is expected to resume within five days, the filing said

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