The first securities firm merger and acquisition case of 2026 has emerged: Jiangsu securities industry consolidation underway, Dongwu Securities plans to acquire Donghai Securities' control, trading halted starting today.

Image source: Visual China

Blue Whale News, March 2nd (Reporter Hu Jie) The first securities firm merger and acquisition case of 2026 has emerged, marking the industry’s first merger of two local securities firms within the same province.

This morning, Dongwu Securities (601555.SH) announced that it is planning to acquire control of Donghai Securities through a share issuance of A-shares. Due to the uncertainty surrounding this matter, the company’s stock has been suspended from trading starting March 2, 2026, to protect investors’ interests. The suspension is expected to last no more than 10 trading days.

Why choose to take control of Donghai Securities? A relevant person from Dongwu Securities’ Secretary Office told Blue Whale News that the main consideration is that both are local securities firms in Jiangsu and are deeply involved in the Yangtze River Delta region. “Their strategic layouts are quite aligned, and they can better leverage synergies in regional services.”

Currently, Jiangsu Province is accelerating the development of a strong financial province and promoting integrated development of Suzhou, Wuxi, and Changzhou. Dongwu Securities and Donghai Securities are both local Jiangsu securities firms. This acquisition will help strengthen the strength of local legal person securities firms, further optimize the layout in key areas, industries, and regions, and promote efficient allocation and coordinated development of financial resources within the province.

Intend to acquire 26.68% of Donghai Securities’ shares

According to the announcement, this transaction is still in the planning stage. The preliminary plan involves issuing shares to purchase assets from Changzhou Investment Group Co., Ltd. (hereinafter referred to as “Changzhou Investment Group”).

On March 1, 2026, Dongwu Securities and Changzhou Investment Group signed a “Letter of Intent for Share Issuance to Purchase Assets,” proposing to acquire 26.68% of Donghai Securities’ shares through share issuance. The two parties will further negotiate the specific transaction plan, with the final agreement subject to formal approval. If the acquisition proceeds smoothly, Dongwu Securities will become the largest shareholder of Donghai Securities.

Dongwu Securities is the only local securities firm controlled by state-owned assets in Suzhou. It was renamed and restructured from Suzhou Securities, founded in 1993, and listed on the Shanghai Stock Exchange in 2011. In recent years, Dongwu Securities has maintained steady operational performance. Its earnings forecast indicates that in 2025, the company is expected to achieve a net profit attributable to shareholders of approximately 3.431 billion to 3.668 billion yuan, representing a 45% to 55% increase compared to the previous year. After deducting non-recurring gains and losses, net profit is estimated to be between 3.427 billion and 3.663 billion yuan, with the same growth rate.

The target company, Donghai Securities, is a state-owned enterprise under Changzhou City, established in January 1993, and listed on the National Equities Exchange and Quotations (NEEQ) in July 2015.

In recent years, Donghai Securities’ performance has experienced significant fluctuations. According to its 2025 semi-annual report, in the first half of the year, the company achieved operating revenue of 815 million yuan, up 38.07% year-on-year; net profit attributable to shareholders was 106 million yuan, a substantial increase of 231.01%; and net profit after deducting non-recurring gains and losses was 157 million yuan, up 532.50%. The growth was mainly driven by a 48.5% year-on-year increase in net income from brokerage business to 325 million yuan, and a 160.71% increase in proprietary trading income to 294 million yuan.

However, the company’s investment banking business has continued to decline. Notably, in the first half of 2025, the net income from investment banking was only 55 million yuan, a sharp decrease of 56.58% year-on-year.

Additionally, Donghai Securities has been troubled by past penalties. In 2025, the company was fined 60 million yuan by the China Securities Regulatory Commission for major omissions and false records in its role as an independent financial advisor for Jinzhou Cihang’s 2015 major asset restructuring. The penalty amount was more than twice its net profit attributable to shareholders in 2024.

Enhancing comprehensive strength in wealth management and investment

Market attention is focused on the fact that if this acquisition proceeds smoothly, it will accelerate resource integration between the two firms, realize complementary advantages, unleash business synergy, and further elevate Jiangsu’s financial industry level.

As a high-quality securities firm in the Yangtze River Delta, Dongwu Securities has a solid foundation in wealth management, investment banking, and asset management, with leading positions in specialized sectors such as Beijing Stock Exchange business and bond underwriting.

Xuyizhou, Chief Non-Bank Financial Sector Analyst at Industrial Securities, pointed out that Dongwu Securities demonstrates performance growth and operational efficiency surpassing industry averages, with its pan-proprietary business serving as the core engine of profit growth. The company has expanded capital through orderly issuance of additional shares and rights issues, focusing on developing investment business, and flexibly adjusting investment strategies to resist downturns in bear markets, building a competitive barrier through governance structure. Specifically, the company has proactively engaged in proprietary investments since 2016, with relatively strong trading attributes amid market volatility. Its leverage remains above average among comparable securities firms, with an annualized compound growth rate of 21.9% in proprietary investment scale, reaching 88.999 billion yuan. Its fixed-income investments have also benefited from bond leverage to enhance business growth. Currently, Dongwu Securities’ bond investment scale and leverage are among the top levels in the industry, with leverage growth leading among peers.

Donghai Securities, rooted in Changzhou and deeply involved in the Yangtze River Delta, is a comprehensive securities firm with strong regional brokerage, retail client, and local resource advantages. It also has distinctive strengths in wealth management, fixed income, futures, and derivatives. By the end of 2024, Donghai Securities operated 69 branches and 17 subsidiaries across 20 provinces, municipalities, and autonomous regions nationwide.

Industry insiders believe that after Dongwu Securities acquires control of Donghai Securities, it is expected to enhance its overall strength in wealth management and investment, achieve a comprehensive upgrade in business layout, resource endowment, and service capabilities, and accelerate its transformation into a first-class investment bank with international competitiveness and market leadership. Due to the strong complementarity of their businesses, the integration is likely to generate a “1+1>2” synergy effect.