The types of M&A for listed companies are as follows:

1) Entirety M&A
Entirety M&A refers to a listed company acquiring the entire property right of the target company at a price that is based on the value of the target company’s assets. Upon completion of the acquisition, the target company is commonly reorganized into a branch of the acquiring company. The advantage of entirety M&A results from the target company becoming a branch or wholly-owned subsidiary thus enabling the listed company to reform the target company without shareholder interference. Its disadvantage lies in the amount of capital infusion necessary following the acquisition, resulting in a lack of capital efficiency in comparison to low-cost acquisitions.

2) M&A with a Control of Shares
In this situation, the target company becomes a controlled company of the listed company after the listed company gains control by investment. Its advantages are low acquisition cost and easy relationships with the original shareholders and local government of the target company. Its disadvantage is the existence of restraints on the follow-up operation and reorganization.

3) Share Transfer with Consideration
This situation involves obtaining control of the target company through acquisition of the total or partial equity of the target according to an agreed share price. Usually it is a goodwill acquisition. Because of the current domestic characteristics of share structure, this type of share transfer is largely a government act. Share transfer should be divided into two types, acquisition type and investment type, the latter belonging to the category of capital operation.

4) M & A through Asset Exchange
This is a special form of property transaction pursuant to which the listed company uses certain assets to exchange and acquire equivalent good assets. If accomplished successfully, it can serve to implant good assets into the listed company, and also to replace the listed company’s bad and low profit-making assets, thus achieving a two-way optimization.

5) Secondary Market Acquisition
This method involves acquisition of marketable shares to gain control of a listed company. This acquisition method requires full information disclosure. When the share ownership ratio reaches 30% of the company’s outstanding shares, a tender offer or application for tender offer exemption is necessary. After the offer period, if the share ownership ratio reaches 50% in the target company, the tender offer is successful, otherwise the tender offer fails. This acquisition method requires more capital and is more time consuming. With the development of a more mature stock market, this acquisition method will become more common in China.

6) Transfer of shares with no consideration
This is a special acquisition form of property reorganization in China. It is an act by which the government allocates property right to the acquiring company through administrative means. It is in essence a government act which seeks to transfer less profitable enterprises, without consideration and with the acquiring party’s support. The goals are to improve the enterprise’s operating condition and also to build a large state-controlled company.