By Sherry Qin
China International Capital Corp.'s shares rose sharply after unveiling details of its US$16 billion share-swap deal to merge with two smaller brokerages.
State-owned investment bank CICC's Hong Kong-listed shares advanced 5.4% early Thursday to 36.80 Hong Kong dollars, equivalent to US$4.73. Its Shanghai-listed shares rose 4.1%.
CICC disclosed its plan to merge with Cinda Securities and Dongxing Securities through a share-exchange agreement in November.
CICC plans to issue 3.10 billion mainland China-listed shares valued at 36.91 yuan each in exchange for shares in Cinda and Dongxing, putting the share-swap deal's value at 114.42 billion yuan, equivalent to US$16.24 billion, according to a filing Wednesday after market close.
The deal values Cinda at 19.15 yuan a share, 8% above its last traded price, and Dongxing at 16.14 yuan a share, representing a 23% premium.
Shares of Cinda and Dongxing rallied 4.4% and 10%, respectively, upon the resumption of trade on Thursday.
Chinese authorities have pushed for consolidation in a sector that has seen sluggish deal activity and low business confidence since the pandemic.
Last March, the China Securities Regulatory Commission said it aimed to have 10 securities firms lead the industry within the next five years and sought to build two to three brokerages that would have a global impact by 2035.
Although the new share issuance could dilute CICC's shares, Citi analysts said markets should react positively to the news. The merger could make CICC the third-biggest brokerage in China in terms of revenue scale, according to Citi's calculations.
That would help CICC gain market share and have a better chance of becoming a giant brokerage firm to benefit from the potential relaxation of capital rules, the Citi analysts said in a note.
Write to Sherry Qin at sherry.qin@wsj.com
(END) Dow Jones Newswires
December 17, 2025 22:06 ET (03:06 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
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