By Jiahui Huang

Shares of Guotai Junan Securities and Haitong Securities rose sharply after trading resumed as the two players released details of their merger to form China's biggest brokerage.

In Hong Kong, Guotai Junan Securities shares rose 60% to 12.92 Hong Kong dollars, equivalent to $1.66, and Haitong Securities gained 88%. Their Shanghai listings both rose 10%, leading the gainers on the CSI300 index.

The shares had been suspended a little after the merger was announced early September and Thursday's surge came as trading resumed after the companies released details the deal late Wednesday.

The share swap ratio for both China-listed A shares and Hong Kong-listed shares is such that every Haitong share can be swapped for 0.62 shares of Guotai Junan. The A-share swap share price was set at 8.57 yuan for Haitong Securities and 13.83 yuan for Guotai Junan. The swap ratio is roughly in line with market expectations for a 6 to 10 swap, Citi analysts wrote in a note.

Meanwhile, Guotai Junan plans an A-share placement worth up to 10 billion yuan, equivalent to $1.4 billion, from its controlling shareholder Shanghai State-owned Asset Management. The brokerage will issue up to 626.2 million A-shares at 15.97 yuan each.

After the deal, Haitong Securities will be delisted and merged into Guotai Junan on both the mainland and Hong Kong markets.

The combined entity will overtake Citic Securities to become China's largest brokerage in terms of assets.

The merger is in line with Chinese policymakers' ambition of helping ten securities lead the industry within the next five years and its hopes to build two to three world-leading brokerages by 2035.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

October 09, 2024 23:11 ET (03:11 GMT)

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