In 2017, the lithium battery industry witnessed a surge in investment and mergers and acquisitions (M&A), with numerous deals reaching into the hundreds of millions. According to reports, there were at least 30 major M&A activities in the sector, highlighting the intense competition and strategic moves within the industry. While many deals succeeded, not all led to positive outcomes, and some ended in failure. This article explores the reasons behind these failures through ten notable cases, offering insights into the challenges faced by companies during this period.
1. **Siu Xin Shares Terminates Acquisition of Huiqiang New Materials and Alibaba Shares**
On August 14, 2017, Siu Xin announced the termination of its acquisition of Alibaba shares due to disagreements over pricing and valuation. The company later planned to invest in Jintai Potash Fertilizer and Shanghai Zhong Li. However, it also abandoned its plan to acquire Huiqiang New Materials, citing differences in interests between the parties. These setbacks highlighted the difficulties in aligning expectations in complex transactions.
2. **Xianfeng Holdings Abandons Acquisition of Huitong Tianxia and Miaosheng Power**
Xianfeng Holdings had initially aimed to acquire a majority stake in both Huitong Tianxia and Miaosheng Power. However, due to unresolved issues regarding transaction price and terms, the deal was eventually called off. The failure underscored the risks involved in acquiring power battery companies, especially in a rapidly evolving market.
3. **Ottga Fails to Acquire Hai Sida Power**
In January 2017, Ottga planned to acquire 100% equity in Jiangsu Haisida Power for 2.5 billion yuan. Despite signing performance commitment agreements, the deal was terminated in July due to changing market conditions and policy uncertainties. High performance targets and rising costs posed significant challenges, leading to the decision to abandon the transaction.
4. **Changxin Technology's Failed Acquisition of BAK Battery**
Changxin Technology had been working on acquiring 75% of BAK Battery since September 2016 but ultimately decided to terminate the deal. Although the company intended to restart the acquisition in the future, the high net profit commitments and market volatility made the deal risky.
5. **Qunxing Toys Fails to Acquire Space-Time Energy**
Qunxing Toys aimed to acquire 100% of Space-Time Energy for 2.9 billion yuan to expand into the new energy vehicle battery market. However, due to disagreements on key terms, the deal was terminated in September 2017. This marked the third failed restructuring attempt for Qunxing, reflecting the challenges of entering the lithium battery sector.
6. **Shengyang Stocks’ Investment in Lithium Battery Companies Fails**
Shengyang Shares had planned to invest 850 million yuan in two lithium battery companies but had to cancel the deal due to changes in national policies. The lack of alignment between the target companies and the investment criteria led to the decision to halt the project.
7. **Jinguang Electric Abandons Acquisition of Lithium New Materials**
Jinguang Electric initially aimed to acquire Hongtu Diaphragm and Lithium New Materials but eventually chose to focus on one target instead. The decision to abandon the second acquisition demonstrated the need for careful selection and strategic planning in M&A activities.
8. **Snow Wright’s Shifting Acquisition Targets**
Snow Wright initially planned to acquire Shenzhen Snow but later changed its target to another power battery company. The final deal involved two companies, showcasing the complexity and shifting priorities in the M&A process.
9. **Del Fails to Acquire Henan Yiteng New Energy**
Del attempted to acquire 85.38% of Yiteng New Energy but had to abandon the deal due to a judicial freeze on the target company’s shares. The situation highlighted the legal and financial risks that can derail even well-planned acquisitions.
10. **Western Mining Abandons Qinghai Lithium Acquisition**
Western Mining had initially planned to acquire 100% of Qinghai Lithium Industry but terminated the deal due to issues related to mining warrants. The company shifted its focus to acquiring Daliang Mining using cash instead of shares, emphasizing the importance of flexibility in M&A strategies.
In summary, 2017 was a transformative year for the new energy industry, marked by regulatory changes and increased competition. As the lithium battery sector matured, companies faced greater scrutiny, higher valuations, and more complex challenges. Successful M&A required not only financial resources but also strategic foresight and risk management. For companies looking to enter or expand in the lithium battery industry, careful evaluation of targets and clear alignment of goals became essential to avoid costly failures.
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