A high-profile "snake swallowing elephant" cross-border acquisition attempt by Doright Co.,Ltd. (300950), with a market cap of just 2 billion yuan, has been terminated after failing to acquire Alibaba-affiliated Whale Cloud Technology.
After four months of negotiations, the deal—where the target company's assets were 4.8 times larger and revenue 7.2 times higher—collapsed due to "failure to reach consensus on core terms." The termination announcement marked a dramatic end to the ambitious merger.
Adding to the intrigue, Liu Xiaodan, dubbed the "M&A Queen," acquired a 5% stake at 17.82 yuan per share just three days before the restructuring announcement, capitalizing on a subsequent 59% stock surge.
Whale Cloud, a core Alibaba Cloud ecosystem player backed by investors like China Merchants Capital, had previously failed in its IPO attempt. Its 3 billion yuan valuation starkly contrasted with Doright's smaller capital base, becoming the deal's fatal flaw.
The failed merger not only exposed valuation challenges in "small acquiring large" transactions but also raised insider trading concerns due to well-timed share transfers, making it a case study for M&A regulation under China's registration-based IPO system.
**Pre-Surge Entry & Abrupt Termination** Doright announced the proposed acquisition of Whale Cloud on July 14, 2025, planning to pay via stock issuance and cash while raising supporting funds. The market reacted euphorically, with Doright's stock soaring 59% over three trading days.
However, three days before the rally, controlling shareholder Wei Zhenwen transferred a 5% stake to Hangzhou Chenqi Chenghe Management at 17.82 yuan/share—far below the post-resumption market price, granting the buyer massive paper gains.
Hangzhou Chenqi is controlled by Liu Xiaodan, former chairwoman of Huatai United Securities and founder of M&A-focused Chenyi Fund. Her timely entry amplified speculation about deal orchestration.
**Lopsided Financials Doomed the Deal** Whale Cloud's 2024 financials revealed 5.41 billion yuan in total assets and 3.05 billion yuan in net assets—4.8x and 4.1x Doright's figures, respectively. Revenue (3.65 billion yuan) and net profit (205 million yuan) also dwarfed Doright's (509 million yuan and 96.72 million yuan).
The complex transaction structure, requiring consensus on valuation, share pricing, and performance guarantees, proved untenable. On November 7, Doright cited irreconcilable differences on "core terms" as the reason for termination.
**Whale Cloud: A "Sexy" Alibaba-Backed Unicorn with IPO Struggles** Founded in 2003 as ZTEsoft, Whale Cloud was rebranded after Alibaba acquired a 43.66% stake in 2018 for 1.22 billion yuan. The company provides cloud-based digital transformation solutions to telecoms, governments, and enterprises, serving 1.8 billion users globally.
Despite securing funding from investors like China Merchants Capital and setting ambitious IPO targets (including a $10 billion valuation goal), Whale Cloud's standalone listing plans stalled. The Doright deal was seen as an alternative path to public markets.
**Doright's Volatile Performance & Liu Xiaodan's Play** Doright, a heat exchange equipment manufacturer listed in 2021, has seen erratic earnings—plunging post-IPO, rebounding briefly, then declining again in 2023. Its core IPO project faced four consecutive delays, exposing execution weaknesses.
Liu Xiaodan's investment aligned with her strategy: using small-cap firms as platforms for transformative M&A. Even with this deal's failure, her pre-rally entry secured substantial gains, while Doright's future restructuring moves remain under scrutiny.
The collapsed merger underscores the risks of mismatched acquisitions but leaves the door open for Doright's next capital maneuver—with the "M&A Queen" still holding her cards.
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