The latest progress has been made in the acquisition of Dingqiao Communication, which was once highly anticipated due to the involvement of Oriental Materials.
On January 19th, the State Administration for Market Regulation announced on its official website the acquisition of the equity of Dingqiao Communication Technology Co., Ltd. (hereinafter referred to as Dingqiao Company) by operators such as Huawei Technology Co., Ltd. (hereinafter referred to as Huawei) and Chengdu High tech Investment Group Co., Ltd. (hereinafter referred to as Chengdu High tech Investment Group). Publicity period: January 19, 2024 to January 28, 2024.
According to the transaction information disclosed on the official website, Huawei Technology Co., Ltd. and Chengdu High tech Investment Group Co., Ltd. are planning to jointly acquire 100% equity of Dingqiao Communication Technology Co., Ltd. ("Dingqiao Company"), which is mainly engaged in the research and development and promotion of communication solutions for industry clients. Prior to this transaction, Huawei and Nokia Solutions and Networks GmbH; Co. KG (referred to as "Nokia") indirectly holds a total of 100% equity in Dingqiao Company and jointly controls Dingqiao Company.
After the transaction, Huawei Technology Co., Ltd., Chengdu High tech Investment Group Co., Ltd., Chengdu High tech Jicui Technology Co., Ltd., Huagai Venture Capital Management (Beijing) Co., Ltd. and other operators will jointly hold 100% equity of Dingqiao Company through their jointly established shareholding companies, jointly controlling Dingqiao Company.
Dingqiao has always had a close relationship with Huawei. Dingqiao has obtained design and technology authorization from Huawei for smartphones, manufacturing and selling its own brand of smartphones. It has also gained attention from the outside world due to the acquisition plan launched by Oriental Materials (SH603110) last year.
On April 9, 2023, listed company Dongfang Materials announced its plan to acquire 51% equity of TD TECH through private placement, with Nokia as the trading partner and a transaction consideration of 2.1216 billion yuan. 49% equity in TD TECH is held by Huawei, with Dingqiao as its wholly-owned core subsidiary.
But the acquisition was later opposed by Huawei, which stated that it had no intention or possibility of jointly operating TD TECH with New Oriental New Materials. At the same time, Huawei is evaluating the relevant situation and has the right to take follow-up measures, including but not limited to exercising the right of first refusal, selling all shares to withdraw, and terminating relevant technology authorizations for TD TECH and its subsidiaries.
On December 19, 2023, Oriental Materials announced the termination of its acquisition of 51% equity in Dingqiao Company and reached a settlement with Nokia regarding the acquisition.
In its previous announcement, Oriental Materials disclosed TD TECH's unaudited financial statements. In 2021 and 2022, TD TECH's operating revenue was HKD 5.206 billion and HKD 8.622 billion, respectively, with net profits of HKD 52.9732 billion and HKD -157 million, respectively.
An industry insider told reporters that Nokia hopes to exit Dingqiao, which means that Dingqiao needs new investors. However, for Huawei, once TD TECH becomes a subsidiary of a listed company, its relationship chain with Huawei may be amplified. The possible stock market speculation that may occur as a result is an untouchable "red line" within Huawei. The introduction of Chengdu High tech Investment Group Co., Ltd. and other operators this time is a consensus reached by both parties in terms of business philosophy.
However, as of the time of publication, Huawei and Chengdu Gaotou Group have not made any public responses to specific transaction matters.