SEP(SH:600021) Mei Ri Jing Ji Xin Wen·2025-09-10 03:21Core Viewpoint - Shanghai Electric has terminated its major asset acquisition of K-Electric Limited due to unmet closing conditions and changes in the business environment in Pakistan, which no longer align with the company's international development strategy [1][2][3]. Group 1: Termination of Acquisition - The decision to terminate the acquisition was not made impulsively but followed a rigorous internal decision-making process [2]. - Shanghai Electric had been disclosing the progress of the acquisition every 30 days since March 2017, indicating ongoing challenges in meeting the necessary conditions for the deal [2]. - The final announcement to terminate the acquisition was made on September 9, 2023, after the board of directors reviewed and approved the decision [2][4]. Group 2: Reasons for Termination - The primary reasons for the termination include the failure to meet the closing conditions outlined in the share purchase agreement and the changing business environment in Pakistan [2][3]. - Since the acquisition process began in 2016, KES Energy Company has consistently failed to meet the required conditions, allowing Shanghai Electric to terminate the agreement [3]. - Changes in the electricity pricing mechanism in Pakistan significantly reduced K-Electric's profitability and equity value, leading to a reassessment of the transaction [3]. Group 3: Impact on Shanghai Electric - Shanghai Electric stated that the termination of the acquisition would not have a significant adverse impact on its operations or financial status, as the deal had not yet met the closing conditions [4]. - The company emphasized that the termination would not harm the interests of the company or its minority shareholders [4]. - The company has experienced significant changes in its internal operations and the external industry environment over the nine years since the acquisition was initiated [5]. Group 4: Industry Context - The domestic energy structure in China has undergone notable changes, with a shift from traditional coal-fired power to a focus on clean energy [6]. - As of mid-2023, the total installed power generation capacity in China reached 3.65 billion kilowatts, reflecting an 18.7% year-on-year increase [6]. - Renewable energy sources, particularly wind and solar, have seen substantial growth, with non-fossil energy accounting for over 60% of the installed capacity [6].