Chongqing Iron and Steel Group, the former major shareholder of Chongqing Iron and Steel Co., Ltd., may be "taken down" by other means.

SMM: last night, Chongqing Iron and Steel (601005.SH), a subsidiary of Baowu Iron and Steel, announced that it had abandoned the 100% stake in Chongqing Iron and Steel Group, the former major shareholder, because the transfer reserve price had been higher than the company's expected price and the listing period expired and did not re-list, the company terminated its investment to participate in the establishment of a special fund for the acquisition of Chongqing Iron and Steel Group.

Company sources said, "the acquisition involves many aspects, the company is also considering other ways of acquisition, after a specific new plan will be announced in a timely manner."

On March 20 this year, Chongqing SASAC announced that it would publicly transfer its 100% stake in Chongqing Iron and Steel Group on the Chongqing Stock Exchange at a floor price of 2.563 billion yuan.

The assets to be purchased by Chongqing Iron and Steel include electronics companies, transportation companies, industrial companies under Chongqing Iron and Steel Group, Chongqing Chaoyang Gas Co., Ltd., steel production equipment and related land, and other assets. prior to this, the company's major shareholder Siyuan Joint Fund has paid 1 million yuan in confidentiality funds.

These four companies provide Chongqing Iron and Steel with industrial gas, automatic operation and maintenance, cargo transportation and other products and services. Last year, nearly 80% of their income came from Chongqing Iron and Steel. According to information disclosed by Chongqing Iron and Steel, the net assets of the four companies to be acquired are valued at 900 million yuan. In 2019, their total revenue was 1.5 billion yuan and their net profit was 100 million yuan.

Chongqing Iron and Steel is symmetrical, and the assets the company plans to acquire are strongly related to the production and operation of listed companies, which are of great significance to the company both from a strategic and economic point of view.

At the end of 2017, Chongqing Iron and Steel completed judicial restructuring. Chongqing Iron and Steel Group will give all its 23.51% stake in Chongqing Iron and Steel to Longevity Steel, which is no longer the controlling shareholder.

Longevity Steel has two major investors: 75% of shares held by Siyuan Cooperation Fund and 25% of shares held by Chongqing Strategic emerging Industries Equity Investment Fund Partnership (Limited Partnership). After the completion of the restructuring, the four sources of investment became the actual controller, and the nature of Chongqing iron and steel enterprises changed from state-owned holding to mixed ownership.

According to the announcement, Siyuan he Fund is China's first iron and steel industry restructuring fund jointly established by China Baowu and WLRoss of the United States, Sino-US Green Fund, and China Merchants Group. Through market-oriented and professional operation, with the help of global resources, help China's iron and steel industry to remove excess capacity, clear zombie enterprises, and achieve merger and reorganization.

On December 27, 2019, Siyuan he Investment signed a "letter of intent" with China Baowu Iron and Steel Group, and China Baowu became the actual controller of Chongqing Iron and Steel. According to the letter of intent, the legal entity designated by Baowu of China will be transferred to the general partner share of the Siyuan Hehe Chongqing Fund held by Siyuan Hehe Investment, thus becoming the manager of the fund.

Chen Derong, chairman of Baowu Group, has said that this is an important part of China's Baowu strategic layout. However, after Baowu took over, Chongqing Iron and Steel's performance did not improve much. Chongqing Iron and Steel's semi-annual report for 2020 showed that from January to June, the company achieved revenue of 10.876 billion yuan, down 4.94% from the same period last year, and net profit of 121 million yuan, down 80.29% from the same period last year.