2025.12.14
M&A activity in China's A-share market has seen a wave of high-profile deal terminations as 2025 draws to a close. Between November 13 and December 13, at least 20 listed companies announced the termination or suspension of major asset restructuring plans, spanning sectors like semiconductors, pharmaceuticals, chemicals, and IT.
The semiconductor industry has been particularly affected. On December 12, VeriSilicon Microelectronics (688521.SH) called off its acquisition of a 97.007% stake in Xinlai Zhirong, citing misalignment between the target company’s demands and market conditions, regulatory requirements, or shareholder interests. Shortly before, Hygon Information Technology (688041.SH) and Sugon (603019.SH) jointly terminated a merger plan on December 10, stating that key terms could not be agreed upon within the expected timeframe. Other chipmakers like 3Peak Incorporated (688536.SH) and Dioo Microcircuits (688381.SH) also recently scrapped M&A deals.
This surge in deal cancellations highlights broader challenges in M&A negotiations, including valuation gaps, regulatory hurdles, and shifting market conditions.
**Semiconductor Sector Bears the Brunt** Wind data and company filings show over 20 A-share companies abandoned M&A plans between November 1 and December 13, with semiconductors accounting for a significant share.
Hygon and Sugon’s terminated merger, valued at nearly 100 billion yuan, triggered a sell-off in Sugon’s shares. Despite the setback, both firms emphasized continued collaboration—Hygon focusing on CPU/DCU chips and Sugon on computing infrastructure—to build a full-stack semiconductor ecosystem.
VeriSilicon and Dioo Microcircuits also halted acquisitions. VeriSilicon cited mismatched expectations with Xinlai Zhirong’s management, while Dioo failed to agree on terms with Shanghai Rongpai Semiconductor, including pricing and performance guarantees. Notably, 3Peak dropped its bid for Ningbo Aura Semiconductor within weeks, citing "immature conditions."
Outside semiconductors, companies like Jame Technology (300868.SZ) and Hi-Tech Group Development (600082.SH) also axed deals. Jame abandoned its June plan to buy a stake in an AI server firm after six months of negotiations.
**Valuation Gaps and Market Volatility** Most terminations cited disagreements over core terms, unripe deal conditions, or changing market dynamics.
An investment banker noted that valuation disputes are common, with buyers seeking conservative estimates and sellers pushing for premiums. "M&A requires win-win alignment, but divergent views on pricing unprofitable vs. profitable assets can derail talks," they added.
Hygon and Sugon’s announcement referenced "significant market changes" since their merger was first proposed. Hygon’s shares had surged 51.64% during the negotiation period, hitting a record high of 277.98 yuan in September, while Sugon also peaked. Similarly, VeriSilicon’s stock jumped nearly 50% post-announcement before the deal collapsed.
"Market swings—especially in tech—can tilt agreed terms in favor of one party, reigniting valuation disputes," another banker explained. Differences in valuation methods (e.g., discounted cash flow vs. market multiples) and performance guarantees further complicate high-growth sector deals, where long-term uncertainty deters strict commitments.
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