The long-rumored "Dongyang Guang (600673.SH) bidding for Chindata" has made new progress. Dongyang Guang recently announced that the company, along with its controlling shareholder Shenzhen Dongyang Guang Industrial Development Co., Ltd. (referred to as "Dongyang Guang Group") and other joint investors, will form a buyer consortium to acquire 100% equity of Chindata's China business entity (referred to as "Chindata China") from Bain Capital for 28 billion yuan through cash payment. The dynamic price-to-earnings ratio for this transaction is 15.66 times. CITIC Securities serves as the lead financial advisor for the seller in this transaction.
This represents the largest M&A transaction in China's IDC (Internet Data Center) industry to date, drawing widespread industry attention. However, in the three months preceding the disclosure of this acquisition information, Dongyang Guang's stock price surged dramatically, with a cumulative gain of 165.79% during this period, far exceeding both sector gains and overall market performance during the same timeframe. What accounts for such strong performance in Dongyang Guang's stock price? Why did some media outlets report on Dongyang Guang's bidding activities before the company's official announcement? Regarding questions about the timing of this acquisition and whether insider information was leaked in advance, multiple attempts to contact Dongyang Guang by phone on September 11 went unanswered.
**Cross-Sector Acquisition of IDC Business with Complex Nested Transaction Structure**
Dongyang Guang's main business operations are diverse, encompassing six major segments: electronic components, high-end aluminum foil, chemical new materials, energy materials, liquid cooling technology, and embodied intelligence. The company's profitability has been poor in recent years. According to Wind data, from 2022 to 2024 and the first half of 2025, Dongyang Guang's weighted return on equity was 13.05%, -2.99%, 3.99%, and 6.71% respectively, with profitability still in recovery.
As of June 30 this year, Dongyang Guang's asset-liability ratio climbed to 66.45%, and its interest-bearing debt ratio rose to 51.40%, both approaching historical highs. The company's short-term borrowings at the end of the first half totaled 9.11 billion yuan, non-current liabilities due within one year amounted to 2.066 billion yuan, and long-term borrowings stood at 3.298 billion yuan. The company's cash and cash equivalents at period-end were 6.416 billion yuan, with current and quick ratios of 0.91 and 0.77 respectively.
Under tight liquidity conditions, Dongyang Guang opted for a "consortium acquisition" approach. The company and its related party Dongyang Guang Group plan to jointly increase capital in Yichang Eastern Data No.1 Investment Co., Ltd. (referred to as "Eastern Data No.1") by 3.5 billion yuan and 4 billion yuan respectively. After the capital increase, they will hold 46.6654% and 53.3332% of Eastern Data No.1's equity respectively. Meanwhile, Eastern Data No.1, through its wholly-owned subsidiary Yichang Eastern Data No.3 Investment Co., Ltd. (referred to as "Eastern Data No.3"), plans to acquire 100% equity of Chindata China, specifically including 7 wholly foreign-owned enterprises and 1 VIE company.
To implement this transaction, Eastern Data No.1 will contribute the aforementioned capital increase funds to its wholly-owned subsidiary Shanghai Eastern Future Data Co., Ltd. (referred to as "Eastern Future"). Eastern Future has signed an acquisition loan agreement with a banking syndicate and plans to further contribute the relevant loans and capital to its wholly-owned subsidiary Eastern Data No.3, with Eastern Data No.3 serving as the final transaction entity to acquire 100% equity of Chindata China for 28 billion yuan. Upon completion of this transaction, Dongyang Guang will become a participating shareholder of Eastern Data No.1, indirectly holding participating equity in Chindata China.
According to relevant regulations, this capital increase constitutes joint investment with related parties, and neither the capital increase nor the acquisition constitutes a major asset restructuring.
The multi-layered nested transaction structure is dizzying, with Dongyang Guang merely obtaining participating rights in Chindata China. Analysts point out that such arrangements may be related to Dongyang Guang's limited financial capacity on one hand, and may lay groundwork for future capital operations on the other.
Based on the income approach evaluation results as the final assessment conclusion, the market value of all shareholders' equity in Chindata Group's China business (simulated consolidated entity) as of the evaluation reference date (May 31, 2025) was assessed at 29.093 billion yuan. The listed company, referencing the above evaluation conclusion, agreed to Eastern Data No.3's acquisition of 100% equity of the target company at a transaction price of 28 billion yuan.
"This transaction holds multiple strategic values for Dongyang Guang: on one hand, it helps the company quickly enter the high-growth data center track and optimize asset and resource allocation structure; on the other hand, through industrial synergy with the target company, it promotes Dongyang Guang's technological breakthroughs and market expansion in core business areas including liquid cooling technology, electronic components, and intelligent robots," stated Dongyang Guang.
**Abnormal Stock Price Surge Before M&A with Multiple Suspicious Points**
In this transaction, Chindata's controlling shareholder Bain Capital achieved substantial returns. In 2016, Wangsu Science & Technology invested in Chindata. In 2019, Bain Capital spent 1 billion yuan to acquire Wangsu Science & Technology's stake in Chindata. In May 2019, Bain Capital invested another $570 million in Chindata and merged it with its subsidiary Bridge DC. In September 2020, Chindata went public on NASDAQ in the United States. In September 2023, Bain Capital privatized Chindata at approximately $3.2 billion, holding 100% of its equity. Subsequently, Bain Capital split Chindata's China and overseas businesses, with the China business forming WintriX DC Group and overseas business under Bridge DC.
Based on the transaction price of 28 billion yuan (approximately $3.933 billion), compared to Chindata's privatization price of $3.2 billion, Bain Capital held the stake for 2.25 years, gaining $733 million with an annualized return rate of approximately 9%.
Although Dongyang Guang portrays this transaction with bright prospects, multiple suspicious points remain unresolved.
First, on the eve of this transaction, Dongyang Guang Group's "old friend" - Chongqing Element Private Securities Investment Fund Management Co., Ltd. (representing "Element Yuanxi Private Securities Investment Fund," referred to as "Chongqing Element Fund") made a lightning exit.
Tracing historical records, Chongqing Element Fund partnered with Dongyang Guang Group as early as November 2023, acquiring 150,693,800 unrestricted tradable shares held by Dongyang Guang Group (accounting for 5% of the company's total share capital at the time) at 6.71 yuan per share. In December 2024, Chongqing Element Fund transferred these shares to Suzhou Fenghe Yinghui Enterprise Management Partnership (Limited Partnership) (referred to as "Fenghe Yinghui") at 8.33 yuan per share, with Dongyang Guang Group and Fenghe Yinghui forming a concert party relationship.
Chongqing Element Fund acquired the above shares for 1.011 billion yuan and transferred them after holding for one year at a total price of 1.255 billion yuan, achieving a total investment return rate of 24.1%. The entire share agreement transfer was completed in May 2025.
According to informed sources, Chindata began seeking acquirers in May this year, with multiple mainland companies including Dongyang Guang participating in the bidding. Both Chongqing Element Fund and Fenghe Yinghui are concert parties of Dongyang Guang Group - besides this, do they play other roles? Currently, Fenghe Yinghui is Dongyang Guang's third-largest shareholder, holding 151 million shares, accounting for 5.02% of Dongyang Guang's total share capital.
Moreover, numerous funds made substantial purchases of Dongyang Guang in the second quarter of this year. For instance, by the end of June this year, seven funds under Fuguo Fund Management collectively held 75.6812 million shares of Dongyang Guang, an increase of 2.4841 million shares from the end of the first quarter, with period-end holdings accounting for 2.52% of the company's total tradable share capital. Among the seven funds, four are managed by fund manager Yang Dong.
Another suspicious point concerns whether the acquisition information was leaked in advance. As early as May this year, market rumors suggested that Bain Capital planned to sell Chindata's China business, with transaction valuation potentially exceeding $4 billion, approximately 29 billion yuan. Besides Dongyang Guang, prospective buyers reportedly included Runze Technology, Youzu Interactive, and other companies.
On the evening of September 10, Dongyang Guang Group published a message on its WeChat public account stating that this acquisition lasted several months, with Dongyang Guang Group standing out through its deep industrial foundation, technological accumulation, and long-term synergy potential, ultimately successfully winning the bid.
With the acquisition lasting several months, was there insider information leakage during this period?
The stock price of Dongyang Guang began rising continuously from relative lows around May this year. According to Choice data, from June 3 to September 11 this year, Dongyang Guang's stock price surged significantly, fluctuating between 9.43 yuan per share and 27 yuan per share, with a cumulative gain of 165.79% during this period, compared to sector gains of 27.52% and overall market gains of 15.77% during the same period. In the 30 trading days before disclosing the acquisition, the company's stock price accumulated gains exceeding 66%, while the overall market gained 5.43% during the same period.
Clearly, the company's stock price movements were highly abnormal before this acquisition.
Notably, on September 10, shortly after Dongyang Guang announced the acquisition, the Shanghai Stock Exchange issued a regulatory inquiry letter regarding the company's joint capital increase with related parties to acquire assets, though specific details were not disclosed.
This acquisition still faces uncertainties. According to Dongyang Guang's arrangements, this transaction still requires shareholder meeting approval.
Comments