Core Viewpoint - The acquisition deal between Guangzhi Technology and Xian Dao Electronics has been terminated after nine months of negotiations due to disagreements on commercial terms and changes in the external environment, leading to significant stock price fluctuations for Guangzhi Technology [2][4][5]. Group 1: Acquisition Details - Guangzhi Technology announced the termination of the transaction to acquire 100% of Xian Dao Electronics and raise matching funds, citing changes in the external environment and lack of consensus on commercial terms with some transaction parties [2][4]. - Following the announcement of the acquisition in October 2022, Guangzhi Technology's stock price surged by over 400% within ten days, and nearly 20,000 new shareholders were added by May 2023 [2][6]. - The stock price dropped by 6.6% on June 30, 2023, after the termination of the deal, raising concerns for the new shareholders [2][6]. Group 2: Financial Performance and Valuation Concerns - The acquisition raised questions about the asset quality and high valuation of Xian Dao Electronics, especially as Guangzhi Technology's total assets were approximately 4.189 billion yuan, while its market value was around 3.1 billion yuan before the acquisition announcement [6][9]. - Xian Dao Electronics was valued at 21 billion yuan in 2024, despite a significant decline in net profit from 4.66 billion yuan in 2022 to 4.11 billion yuan in 2023, indicating a disparity between performance and valuation [8][9]. - The net profit margin for Xian Dao Electronics decreased from 21.3% in 2022 to 14.2% in 2023, despite revenue growth, highlighting concerns about the sustainability of its financial performance [8][9]. Group 3: Historical Context and Regulatory Environment - Xian Dao Electronics had previously attempted to go public but faced regulatory challenges due to uncertainties in its profitability, which contributed to skepticism regarding its valuation in the acquisition [10][11]. - The acquisition was characterized as a "quasi-backdoor listing" due to the same actual controller overseeing both companies, allowing the transaction to bypass stricter IPO standards [12]. - Guangzhi Technology's financial performance has been declining, with net profits dropping from 24 million yuan in 2020 to a loss of 241 million yuan in 2023, raising further concerns about the viability of the acquisition [12].