Guotai Junan Securities and Haitong Securities have outlined their proposed merger to form a state-backed brokerage with USD226bn assets. Under the deal, Guotai Junan will issue A and H shares to Haitong shareholders at a 0.62 to 1 ratio. The exchange is valued at CNY8.57 (USD1.21) in China, a 2.3% discount, and HKD4.79 (USD0.616) in Hong Kong, a 32% premium. Guotai Junan plans to raise up to CNY10bn to fund the merger via a share placement. The combined entity will surpass Citic Securities as China’s largest brokerage, with CNY1.6tr in assets. Haitong will be delisted from Shanghai and Hong Kong upon completion, pending shareholder and regulatory approvals. UBS advised Guotai Junan, while DBS advised Haitong.