Hygon Information Technology (SHA:688041) terminated its planned merger with its biggest shareholder and server manufacturer, Dawning Information Industry, or Sugon (SHA:603019), both companies said in separate disclosures to the Shanghai bourse.
The merger, first announced in May, would have involved Hygon absorbing Sugon through a share swap and eventual delisting of Sugon from the Shanghai bourse.
Sugon holds about 28% of Hygon's shares, but Hygon's market capitalization of 497.9 billion yuan is bigger than Sugon's 131.9 billion yuan.
Both companies have "actively promoted various aspects of the transaction, but due to the large scale of the transaction and the numerous parties involved, the feasibility study for the major asset restructuring plan has been lengthy," the two companies said in separate disclosures on Wednesday.
Both Hygon and Sugon also cited changes in the market environment, adding that the conditions are not yet ripe for the transaction.
The termination will not adversely impact Hygon's operations, it said.
Shares in Sugon plunged 10% during afternoon trading on Wednesday, while shares in Hygon slipped 2%.
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