The similarity between backdoor listing and shell listing is that they are both activities to reconfigure shell resources of listed companies, both for indirect listing. The difference between them is that shell listed companies first need to gain control over a listed company, while backdoor listed companies already have control over the listed company.
From the specific operation point of view, when non-listed companies are preparing to buy shells or go public by backdoor, the first problem they encounter is how to choose the ideal shell company. Generally speaking, shell companies have some characteristics: their industries are mostly sunset industries, with slow business growth, meager profitability and even losses; In addition, the company's shareholding structure is relatively simple, which is conducive to its acquisition and holding.
In terms of implementation means, the general practice of backdoor listing is as follows: first, the group company first divests a high-quality asset and goes public; The second step is to inject the key projects of the group company into the listed company by raising funds through a large proportion of allotment of shares by the listed company; The third step is to inject the non-key projects of the group company into the listed company through the rights issue to realize backdoor listing. Slightly different from backdoor listing, backdoor listing can be divided into two steps: buying a shell-backdoor, that is, first acquiring and holding a listed company, and then using this listed company to inject other assets of the shell buyer through allotment and acquisition.
history
Starting from 1934, the United States began to implement backdoor listing, which became more and more popular because of its low cost and high success rate. During the economic recession, the income of many listed companies decreased and the market value dropped sharply, which created opportunities for other private companies to use this "shell" to go public.
In recent years, with the economic reform and opening up in China, many enterprises want to go public overseas. However, due to political factors and complicated procedures, some enterprises will choose to acquire some shell companies in the United States and list them on Nasdaq or new york Stock Exchange. After the bursting of the internet bubble, many internet companies are on the verge of bankruptcy, and their market value is extremely low, which creates more opportunities for backdoor listing.
Approach to realization
To achieve backdoor listing or shell listing, we must first choose a shell company, combined with our own operating conditions, assets, financing capacity, development planning and so on. To choose a shell company with appropriate scale, the shell company should have certain quality, not too much debt and bad debts, and have certain profitability and restructuring plasticity. Next, non-listed companies gain a relative controlling position through mergers and acquisitions, and the ownership structure of shell companies should be considered. As long as they reach the controlling position, the merger will be successful. There are three specific forms:
A through cash acquisition, you can save a lot of time. Intelligent Software Group adopted this method to go public by backdoor, and soon entered the role after the backdoor was completed, forming a good market response.
B completely through the replacement of assets or equity, the "shell" is cleaned up and reorganized, which is easy to make the assets, quality and performance of the shell company change rapidly and realize the effect quickly.
These two methods are used in combination. In fact, most of them are listed by borrowing "shells" or buying "shells".
Non-listed companies re-control shareholders, and through the reorganized board of directors, clean up and reorganize listed shell companies, divest non-performing assets or rectify the original operating conditions and performance of shell companies.
example
Yingke digital power
1In April, 1999, PCCW, a subsidiary of Li Zekai listed on SGX, injected its assets, including the development right of Cyberport, into Dejinjia, a listed company, and obtained about 60% equity. Stimulated by the news, Dexinjia's share price rose from less than 0. 1 Hong Kong dollar to single digits, up dozens of times. Later, Xinjia changed its name to PCG Digital Power.
Ying ke da Yan real estate
In May 2004, PCCW spun off its real estate business, including North Shawan (the real estate part of Cyberport), Pacific Century Center, PCCW Center, other investment properties and related property and facility management companies, and injected them into the listed company Dongfang Gas, renamed it PCCW Dayan Real Estate, and reduced its shareholding in Ying Da Real Estate through rights issue, cashing in about HK$ 300 million.
Sheng Qiang Group
Johnson & Johnson borrowed a shell. Johnson & Johnson Group was restructured from Shanghai Taxi Company, with a large number of high-quality assets and investment projects. In recent years, Johnson & Johnson Group made full use of the shell resources of its holding company, Pudong Johnson & Johnson, and injected the second and fifth branches of the Group into Pudong Johnson & Johnson through three rights issues, thus completing the purpose of backdoor listing of the factory group.