· As more and more companies go public, LED companies that are accustomed to endogenous growth have begun to have a strong impulse for expansion in order to seek economies of scale.
Since this year, the merger and acquisition boom in the LED industry has gradually developed in an in-depth direction. According to statistics from CSA Research, from January to June 2014, LED lighting companies in mainland China completed a total of 11 M&A transactions, with a total transaction amount of approximately 3.5 billion yuan, and the average capital size of each case was approximately 300 million yuan.
With the frequent occurrence of integration events, the industry was very lively for a while. It can be said that in the special period of being stuck in the market, LED companies are either on the road of acquiring others or being acquired by others!
According to the analysis of CSA Research, the vast majority of recent transactions are aimed at obtaining controlling shares. In addition to extending the industrial chain to achieve diversified development, the purpose of mergers and acquisitions is to consider channels, brands and production capacity to strengthen strength and expand scale.
With the deepening of mergers and acquisitions, LED lighting companies will gradually separate into levels and echelons, and their own mergers and acquisitions integration capabilities will be officially put on the agenda!
The M&A drama in the LED industry is intensifying. Tsinghua Tongfang acquired Zhenmingli for 700 million yuan, Jiawei shares for 122 million yuan, Hongli Optoelectronics acquired Smede for 180 million yuan, Changfang Lighting held Kang Mingsheng for 528 million yuan, Feile Audio acquired Shen'an Investment for 1.85 billion yuan...
It is undeniable that mergers and acquisitions and reshuffles will be carried out no matter which industry it is in, no matter what time it is. In the LED industry where small and medium-sized enterprises gather, there is no doubt that mergers and acquisitions are the general trend.
Many large companies hope to expand their strength and consolidate their leading position through mergers and acquisitions, while small and medium-sized enterprises hope to be preserved by mergers and acquisitions. But who will acquire whom, and who will be acquired by whom, will still touch everyone's sensitive nerves. After all, this may affect the future pattern of the industry, especially those mergers and acquisitions that occur between large companies.
Just when everyone is lamenting that there are too many major events in the industry recently. At the end of June, the LED industry once again broke the news of blockbuster mergers and acquisitions. Epistar’s acquisition of Canyuan can be said to have added a lot of color to the mergers and acquisitions integration events in the LED industry in the first half of this year.
With the mergers and acquisitions and reorganizations between the two leading chip manufacturers in Taiwan, the trend of the strong acquiring the strong has become more and more obvious. Will the industry structure undergo drastic changes due to the marriage between the big players?
A senior securities analyst in the industry said that in the era of traditional lighting, the market share of any company was relatively low, and the market share of companies that did better was only 1% to 2%, but in the era of LED lighting, there will be great changes.
"The electronic product attributes of LED lighting determine that if a company wants to become bigger and stronger, it must have advantages in procurement, manufacturing, channels and other aspects. On the other hand, it also means that there are more and more practical barriers before companies." The securities analyst said that the attributes of the electronics industry force everyone to take action, clear the barriers, and find suitable objects to make up for their shortcomings.
In this analyst’s view, the only two companies in the entire lighting industry that have both manufacturing and channel advantages are Opple and Fo Zhao, so everyone is looking for suitable companies to make up for their shortcomings.
Tang Guoqing, general manager of Samsung LED China, also said that there has not yet been a tens of billions-yuan company in the lighting industry. With the emergence of LED lighting, there will definitely be more than 10 billion-yuan companies in the large circulation field. The strong can do even better. This is something that is just around the corner.
"Lighting will have certain similarities in the large circulation field and the home appliance industry, and there will definitely be an oligarchy pattern." Tang Guoqing said that only when the strong are stronger can Chinese companies have a place in the world.
· “Indeed, since this year, mergers and acquisitions and integration events have mostly occurred between the strong and the strong. Only in this way, while forming strong complementary advantages, can we become stronger and bigger.” The above-mentioned analysts said that this trend is already obvious in the upstream, and it will be more obvious in the downstream application links in the past two years. "With the strengthening of cooperation between the strong and the powerful, the living space left for small and medium-sized enterprises will become smaller and smaller."
Listed companies are the protagonists of mergers and acquisitions
A careful analysis shows that the main companies that have undergone mergers and acquisitions and reorganizations in the first half of this year, such as Tsinghua Tongfang, Guangri Co., Ltd., Foshan Lighting, Jiawei Co., Ltd., Hongli Optoelectronics, Changfang Lighting, Zhongjing Electronics, Lehman Optoelectronics, Epistar Optoelectronics, Feile Audio, Moso Power Supply and other companies are all listed companies.
Mergers and acquisitions occur frequently, and the protagonists are undoubtedly these listed companies.
"The strategy of a company will be very different whether it is listed or not." Tang Guoqing said that after the company is listed, the chairman's responsibilities will change greatly. He must not only operate and manage the company well, but also have the ability to do capital operations. "Development at the product level of an enterprise is like climbing stairs, while successful capital operation is like taking the elevator."
"LED companies have gone public and have made money, which to a certain extent means that the industry has entered the capital era." An industry expert said that both upstream and downstream companies, listed companies with sufficient funds, are trying to carry out external mergers and acquisitions.
"As long as there are suitable objects and opportunities, whether it is a strong alliance or a strong and weak alliance, it should be done." Tang Guoqing said that for listed companies, they will not have the ability to develop rapidly without mergers and acquisitions. If others are moving forward quickly, then companies that stand still will face the risk of being eliminated.
"Listed companies gain more time and cost through mergers and acquisitions of enterprises with certain advantageous resources, gain the right to speak, achieve strategic goal development, and have a place in the LED industry." An industry expert said.
Whether it is for the purpose of enhancing the strength of one's own products by purchasing products, improving one's corporate image by purchasing brands, or achieving mergers and acquisitions of financial data by purchasing profitable companies, the LED industry will become more common in the capital era.
However, when the acquired companies seem to have found a good home, there may be many unspeakable secrets.
"For an enterprise, if it can run well, it is unlikely to hand over the enterprise created by itself to others." Yin Hui, marketing director of Shengpu Optoelectronics, said that actors are definitely willing to be a person who performs on the stage, rather than a person who watches other people's performances, and the same is true for people who run businesses.
“Nowadays, the LED industry is basically dominated by private enterprises, and they are willing to be business owners themselves, rather than just being shareholders.” Chen Haijun, director of Ningbo Liaoyuan Optoelectronics Research Institute, also said that this is inseparable from the common personality gene of Chinese entrepreneurs of “preferring to be a chicken head”.
Just when everyone is looking forward to making the company bigger and gaining various advantages through capital operation, Lu Guangzhou, chairman of Chongqing Bangqiao, said that it would be better to focus and use energy and funds in the areas that you are good at.
"It is possible that after mergers and acquisitions, a burden will be placed on the company. If the integration is not good, it will affect the main business. For most companies, they do not necessarily pursue a 'big and comprehensive' but a 'small and refined' development model." Lu Guangzhou said that capital mergers and acquisitions are a "double-edged sword". After integration, it may also involve the integration of cultures and brands between enterprises, which will test the integration capabilities of the mergers and acquisitions.
Vertical integration VS horizontal integration
Globally, international giants have never stopped the pace of integration. International giants such as Philips and Osram have established their status and roles as industry leaders through vertical and horizontal integration.
Combining vertical and horizontal lines has become the dominant way for LED companies to become bigger and stronger.
Currently in mainland China, companies that choose to deploy in the entire industry chain include Sanan, which gradually extends from the upstream to the downstream, and there are also Nationstar Optoelectronics, which continuously extends from the midstream to both ends. In the past two years, cases of horizontal mergers and acquisitions have also occurred from time to time, such as the recent acquisition of Smed by Hongli Optoelectronics.
In the future, vertical integration or horizontal mergers and acquisitions, which will become the main method of LED mergers and acquisitions in the future?
ANNA