SHANGHAI: Citic Securities Co signed a preliminary agreement to buy smaller rival Guangzhou Securities, the latest in a series of acquisitions by China’s largest brokerage.
Citic Securities plans to fund the purchase by issuing shares to the current owners of Guangzhou Securities – Hong Kong-listed Yuexiu Financial Holdings Group and one of Yuexiu’s wholly-owned units, according to a filing to Shanghai stock exchange.
The acquisition is in line with Citic Securities’ strategy of expanding via asset purchases amid a market downturn, said Founder Securities Co analyst Zuo Xinran.
The latest acquisition will strengthen Citic Securities’ presence in southern China after its failed bid to buy a stake in GF Securities Co in 2004.
Shares of Chinese brokerages have plunged this year as retail investors flee the nation’s sinking stock market amid escalating trade tensions with the US.
Citic Securities has acquired a number of brokerages, including Credit Agricole SA’s CLSA, Wantong Securities Co and Goldstone Securities Citic Securities will conduct due diligence on Guangzhou Securities and will hire financial and legal consultants to carry out the planned transaction, according to the filing.
Trading of Citic Securities shares was suspended on Tuesday and is expected to resume within five days, the filing said. — Bloomberg