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

To contact Bloomberg News staff for this story: Evelyn Yu in Shanghai at yyu263@bloomberg.net

To contact the editors responsible for this story: Charlie Zhu at qzhu46@bloomberg.net, Sharon Chen

©2018 Bloomberg L.P.

With assistance from Bloomberg