On the evening of January 13, Weifang Yaxing Chemical Co., Ltd. (hereinafter referred to as "Yaxing Chemical") issued an announcement announcing the termination of the transaction to acquire 100% equity of Shandong Tianyi Chemical Co., Ltd. (hereinafter referred to as "Tianyi Chemical") through the issuance of shares and cash payment. This means that this veteran chemical enterprise, which has been struggling with operational difficulties since 2019, has once again failed in its attempt to achieve rapid transformation through external mergers and acquisitions. The announcement pointed out that the core reason for the termination of the transaction was the failure of all parties to reach an agreement on key issues such as core demands and the estimated value of the target assets.

Setback in External Transformation
As a leading enterprise in the domestic brominated flame retardant field, Tianyi Chemical not only leads in market share of its core products but also holds the national "Little Giant" qualification for specialized, refined, and innovative enterprises. Previously, the market generally regarded this acquisition as a critical step for Yaxing Chemical to build an industrial layout of "chlor-alkali + PVDC new materials + brominated flame retardants" and an important opportunity to escape its operational difficulties. Although Yaxing Chemical and related parties actively promoted various tasks after the transaction was initiated, due to factors such as changes in the market environment, a consensus on core terms was ultimately not reached.

According to the announcement, Yaxing Chemical has committed to not planning any major asset restructuring matters for at least one month from the date of the termination announcement and plans to hold an investor briefing on February 6, 2026, to address market concerns.

Sun Yuhao, a senior partner at Shanghai Haihua Yongtai Law Firm, analyzed that the termination of this transaction directly hinders Yaxing Chemical's path to creating a growth pole in brominated flame retardants through external mergers and acquisitions in the short term. However, this does not mean the company has permanently closed the door to mergers and acquisitions. In the future, it will need to more carefully evaluate the valuation of targets and its own integration capabilities in strategic decision-making.

Shift to Endogenous Projects
After the setback in external transformation, Yaxing Chemical's transformation focus has shifted entirely to endogenous projects. Just about half a month before the acquisition was terminated, the company announced the official trial production of the "45,000-ton/year high-end new materials project" and the "500-ton/year hexachlorocyclotriphosphazene project and 500-ton/year benzethonium chloride industrialization project." Among these, high-end new materials such as polyvinylidene chloride (PVDC) resin are widely used in food and pharmaceutical packaging, while hexachlorocyclotriphosphazene is an important organic phosphorus chemical intermediate, regarded as a key driver for the company's industrial transformation and profitability enhancement.

However, Sun Yuhao also pointed out that the above-mentioned projects will take time to progress from trial production to standard production and generate stable returns. They also face multiple uncertainties such as market development and cost control. Relying solely on endogenous projects to support mid-term turnaround and transformation poses significant pressure.

Yuan Shuai, Deputy Secretary-General of the Zhongguancun Internet of Things Industry Alliance, believes that the termination of this acquisition is more a result of the failure to reach an agreement on the core terms of a specific target, rather than a rejection of external expansion itself. For Yaxing Chemical at present, endogenous projects are the core support for transformation, while mergers and acquisitions can still serve as a supplementary option.

It is worth noting that this is not the first time Yaxing Chemical's transformation attempts have encountered obstacles. After the overall relocation of its production plant in 2019, the company's operations have been in a recovery period, with net losses recorded for the full year of 2024 and the first three quarters of 2025. During this period, the company has repeatedly planned mergers and acquisitions: in early 2020, Linuo Group's attempt to inject pharmaceutical business through a backdoor listing failed; in early 2021, the plan to acquire Jingzhi Liquor also fell through; the failure to acquire Tianyi Chemical this time has once again caused the company to encounter setbacks at a critical juncture of transformation and upgrading.

Yaxing Chemical's merger and acquisition dilemma also reflects the common challenges faced by the chemical industry in transformation. Dong Peng, a member of the Capital Committee of the China Enterprise Confederation, stated that in mergers and acquisitions in the chemical new materials field, there is often a conflict between valuation expectations and industrial reality. Yuan Shuai suggested that chemical enterprises facing transformation pressure should optimize their merger and acquisition strategies, deeply evaluate technical feasibility and market volatility risks during the due diligence phase, and reduce valuation risks through structured payment methods such as installment payments and performance commitments.

This case also serves as a warning to chemical enterprises to find a balance between valuation negotiations, risk control, and long-term synergy. For Yaxing Chemical, with the external path temporarily blocked, how to steadily advance the implementation and effectiveness of endogenous projects has become the key to its transformation and breakthrough.