Financial News Agency, December 26 (Reporters Zhang Chenjing and Wang Ping'an) In just two weeks, after Aonong Biotech (603363.SH) and Dabeinong (002385.SZ), the two “dark pig farmers” announced a “sweet marriage,” the two sides once again staged a “peaceful break up.”

Today, Aonong Biotech and Dabeinong both announced an agreement of intent to terminate the cooperation. According to the announcement, the suspension of this cooperation is mainly due to major changes such as the freezing of shares in Aonong Biotech's controlling shareholder Aonong Investment. Since December, Onong Biotech has issued announcements relating to the controlling shareholder's share pledge on three days. The controlling shareholder's pledge ratio has continued to rise. Currently, the pledge ratio is close to 98%.

Equity acquisition cooperation comes to an end

On December 12, Dabeinong announced that it signed an “Investment Cooperation Intent Agreement” with Zhangzhou Onong Investment Co., Ltd. (hereinafter referred to as “Aonong Investment”), the controlling shareholder of Aonong Biotech, and signed a “Strategic Cooperation Intent Agreement” with Aonong Biotech.

In the investment cooperation agreement, it was agreed that Dabeinong plans to obtain not less than 51% of Aonong's shares through capital increases and stock expansion. In the strategic cooperation agreement, it plans to invest or acquire high-quality assets under Aonong Biotech through cash. The proposed investment amount is not more than 600 million yuan. At the same time, the two sides plan to carry out multi-level strategic cooperation at the levels of supply chain sharing, joint procurement, business resource integration, asset integration, and equity cooperation.

However, one week after the equity acquisition announcement was issued, Onong Biotech announced that Onong Investment, Mr. Wu Youlin, and their co-actors had a total of 5185,3337 shares of shares with judicial freezing and judicial markings, accounting for 13.16% of their total shareholding and 5.95% of the company's total share capital. Yesterday, Aonong Biotech received the “Regulatory Work Letter Concerning Fujian Aonong Biotechnology Group Co., Ltd.” issued by the Shanghai Stock Exchange to handle matters pledged by the company's controlling shareholder.

The equity freeze and pledge matter cast a cloud over the cooperation between the two sides, which also became the main reason for the termination of this cooperation. Aonong Biotech's stock price in the secondary market also responded. On December 13, Aonong Biotech's stock price fell sharply for many days after opening high. As of today, the stock price has fallen by more than 30% compared to that day. During this period, the company's director and chairman of the supervisory board announced their departure one after another.

Today, the two sides announced the termination of the previous agreement of intent to cooperate. A relevant person from Dabeinong told the Financial Services Association reporter, “The reason for the termination of the cooperation is that we think there is too much uncertainty, mainly because the controlling shareholders of the other company have had their shares frozen. We are also trying to protect the interests of all parties.”

After announcing its intention to cooperate, Dabeinong once stated in the investigation that the transaction will be carried out step by step. Currently, only intentional agreements have been signed. Subsequent companies will make due adjustments to the target company based on strategic collaboration considerations. Currently, the initial selection of other business sectors with good investment value other than pigs, such as food, etc., is in line with the overall direction of the company's future layout. The above is the first phase of the project. In the second phase of the project, the company will further determine whether to obtain control of Onong Biotech based on the due diligence situation in the first phase. If a major business anomaly occurs during the cooperation period, the relevant transactions may be terminated, and the company will control the risk within the effective assets already purchased.

Since the second half of this year, the pledge ratio of Aonong Biotech's controlling shareholders has continued to rise. As of December 18, 2023, Aonong Investment, Mr. Wu Youlin and his co-actors have pledged a total of 3845,26106 shares of the Company, accounting for 97.55% of the total shares held by the controlling shareholders, actual controllers and their co-actors, and 44.14% of the total share capital of the Company.

According to wind data, Aonong Biotech's shareholders Aonong Investment and Wu Youlin have a total of 77 unreleased pledges, all of which have reached the theoretical warning line and the closing position line.

Major mergers and acquisitions also often have “mistakes”

In this deal, Dabinong, who plays the role of the “White Knight”, often “takes an unusual path.” In the declining pig cycle, unlike other pig companies adopting contraction strategies, Dabeinong often chose opportunities to carry out “bottom-up” mergers and acquisitions.

According to company announcements, in the past three years, Dabeinong has successively acquired some or all of the shares in various companies such as Hebei Jushun, Fresh Seedlings, Nongxin Data, Golden Nonghua, and China Shengmu. However, the termination of Dabeinong's high-profile acquisitions has been announced many times before. It has been highly questioned by the market, and has even gone to court with other companies twice.

Before this cooperation came to an end, Dabeinong also experienced “a feather in one place” when acquiring eight feed subsidiaries of Jiuding Technology and Zhengbang Technology last year. Financial News Agency reporters have also reported many times that by the end of the third quarter, Dabeinong had estimated that Zhengbang Technology had accumulated a loss of 200 million yuan in equity funds, and Jiuding Technology's outstanding litigation and estimated debt of 128 million yuan.

In response, the relevant person in charge mentioned above said, “There have been quite a few acquisition projects in recent years, but the company has carried out detailed audits and evaluations. Projects such as Xuan Mei Seedling, Gansu Huineng, and Jilin Hongze have all been audited and evaluated by the company. Of course, individual (acquisition) companies may be trying to seize the opportunity. This time, too, an agreement of intent itself is an agreement of intent. Subsequent due diligence is required, but now, based on public information, the risk has been raised, and the company chose to terminate it in order to avoid risks.”

Affected by the pig cycle, Dabeinong's financial data are also not optimistic. This is one of the reasons why there is so much controversy in the market over its mergers and acquisitions. As of the third quarter, the company's total revenue was 23.931 billion yuan, up 8.31% year on year; net profit changed from profit to loss, net loss was 908 million yuan, a year-on-year decrease of 174.45%.

Frequent acquisitions and the improvement of upstream and downstream industrial chains are not unrelated to Dabeinong's concept of development. At the 2nd Pig Industry Summit hosted by the China Animal Husbandry Association this year, Zeng Shaogenhuo, chairman of Dabeinong, said that the current development of the domestic planting industry and breeding industry is unbalanced, and the development integration of breeding is fundamental for the pig industry to reduce costs and increase efficiency. For small and medium-sized pig farming enterprises, in addition to self-development, industrial consortia is the future development direction.