DeHeng Advised Yunnan Baiyao Group Co., Ltd.

on Merger by Absorption Project Approved

by China Securities Regulatory Commission




On April 24, 2019, Yunnan Baiyao Group Co., Ltd (hereinafter Yunnan Baiyao) received the "Letter of Approval on Yunnan Baiyao Group Co., Ltd.’s Merger by Absorption of Yunnan Baiyao Holdings Co., Ltd." (ZJXK [2019] No. 770) issued by the China Securities Regulatory Commission, which approved Yunnan Baiyao's merger with Yunnan Baiyao Holdings Co., Ltd. (hereinafter Baiyao Holdings) through share issuance. This is an important milestone for the much-anticipated mixed-ownership reform of a state-owned large-scale enterprise and its consolidated listing on the A share market. The transaction amount of this merger exceeded RMB 50 billion. DeHeng continues to provide full legal services for the merger project after providing legal services for mixed ownership reform program of Baiyao Holdings.

As Baiyao Holdings implemented the reform of mixed ownership, the capital increase of over 30 billion yuan at the time made it the largest M&A project in China's healthcare industry, and the largest M&A project in Yunnan Province. It resulted in an equity structure in which state-owned capital and private capital are equally the largest shareholders. While maintaining the influence of state-owned capital on the high-performing enterprise, it maximizes the vitality of private capital. After the completion of the merger at this time, Yunnan Baiyao will become a single platform for the industrial acquisition and resource integration in the pharmaceutical industry, and thereby fundamentally solve the potential risk of horizontal competition and at the same time effectively simplify the management structure, improve the efficiency of business decision-making, and form a more standardized and market-oriented corporate system. It will provide an institutional infrastructure for the future expansion and international development of Yunnan Baiyao.

As the reform of state-owned enterprises deepens, the exploration and innovations made by Yunnan Baiyao in its mixed ownership reform will have extensive and prolonged influence for the market-oriented reform and development of state-owned enterprises. The "Baiyao Model" has become the archetypical example of China's mixed ownership reform. As the legal counsel for Yunnan Baiyao's merger project, DeHeng formed a project team lead by Wu Zhixu, the Chief Director of the Kunming office, and comprising partner Li Zechun as the project head, and attorneys Wang Xiaolei, Yang Zhenghui, Li Qingqian and assistant attorney Li Yanli. The project team provided professional, comprehensive and high-quality legal services for this project, and won high praise from the client and other parties.


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