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Motives and problems of mergers and acquisitions of listed companies in China

Author: ZhangXiaoLi From: www.yourpaper.net Posted: 2009-07-26 14:01:53 Read:
Abstract: In recent years, due to the deepening of China's enterprise reform, the adjustment of industrial structure, international competition intensified reasons, company mergers and acquisitions in China's further development, and has become one of our enterprise asset restructuring and reallocation of resources kinds of important ways. However, due to the complexity and diversity of the mergers and acquisitions, not all corporate mergers and acquisitions are successful and correct. In addition, due to the particularity of the shareholding structure of China's listed companies, mergers and acquisitions of companies in China have a special motivation.
Keywords: listed companies; mergers and acquisitions; integration

0 Introduction

The development of the securities market in China more than a decade, the company mergers and acquisitions, in particular the increasingly wide range of mergers and acquisitions of listed companies, the amount of money involved is growing faster and faster, the frequency of occurrence. Start from the start-up period of the 1990s, China's capital markets, mergers and acquisitions of the Mainland of China has undergone three stages of development: infancy stage of rapid development and specification development stage.

1 of mergers and acquisitions motivation

General motivation
1.1 of mergers and acquisitions
Scholars motivational research and analysis on the mergers and acquisitions of companies, mergers and acquisitions behavior occurred mainly based on these two aspects of the strategic, financial reasons. First, from a strategic motives, mergers and acquisitions, the most important goal is to integrate the resources to help companies achieve certain strategic objectives. This can mainly be summarized as hope to expand business scale through mergers and acquisitions to achieve economies of scale; through the integration of capital, technology, marketing, brand, and other resources to achieve shared or complementary resources; through strategic acquisitions to enter new industries; reduce competition in the market to improve their own competitiveness. Second, from a financial motivation, mergers and acquisitions through the acquisition of undervalued target enterprises, increase the value of the acquiring shareholders interests; reduce transaction costs through mergers and acquisitions, improve operational efficiency, and achieve tax savings purposes.
1.2 of mergers and acquisitions special motivation
Our company mergers and acquisitions activity, in addition to the general motivation, there is a special motivation.
(1) buy a "shell" listed.
This refers to the acquiring company through the acquisition of listed companies (shell company), and then injected into the way of a reverse merger of the business and assets of acquired businesses, in order to achieve the purpose of indirect listing. In our current system, listed companies relative to non-listed companies with a wide range of business development advantage, but the listed qualifications is very scarce. Listed eligible to become a particular value of the resources - the "shell" of resources. Practice has proved that: the use of resources of the "shell" of listed companies has been the topic of much speculation is the main theme of the reorganization of listed companies and the stock market, and led to the "Shell" transaction price has been seriously distorted.
(2) the Government's "go-between" and the leading role.
Before the split share structure reform, the shareholding structure of China's listed companies and not the flow of state-owned shares, legal person shares and tradable shares. Ventilation is not state-owned shares and legal person shares of the total share capital of more than 60%, in order to prevent state-owned assets in the loss of transfer, the government often involved in corporate mergers and acquisitions activities. In addition, it is also determined by the government has a controlling position in the enterprise. Intervene and leading government merger and reorganization of enterprises, on the one hand to reduce unnecessary waste of resources, and promote effective, rational allocation of resources; the other hand, we must see that the government and the general theme of the market, the pursuit of economic efficiency is not always inappropriate intervention in economic activities, the normal market mechanism may be distorted, but counterproductive.
(3) to beautify the financial statements Listing Qualifications reserved.
China's securities law: two consecutive years of losses of listed companies will be ST treatment, the third year of losses hopeless will be delisted. From the above analysis, it can be seen that the listed company qualification is a very valuable company resources. Therefore, some of the poor performance of the company in order to keep their listing qualifications, often through some form of asset restructuring to beautify their financial statements, the so-called "statements of reorganization. Statements of reorganization does not make a real turnaround and reducing losses of listed companies, only a temporary increase in order to achieve the purpose of Paul with the performance of listed companies.
(4) from the secondary market for profit.
Practice has proved that a reorganization of listed companies to publish news, often caused by the strong reaction of the secondary market, and caused the company's share price rose sharply. The operator of the restructuring of some listed companies is not to truly integrate the company's business in order to improve its profitability, but would like to take reorganizing to engage in insider trading to profit from the secondary market. Many cases in mergers and acquisitions, the share price of the listed companies are often soared, until the M & A announcement published in the paper, and its share price all the way down. This reorganization news playing the stock market behavior, not only the listed company itself is kind of damage, can also affect the normal operation of the securities market.

2 of mergers and acquisitions exist

Due to the development of China's securities market has experienced only time in more than a decade, China's securities laws and regulations imperfect reasons, China's mergers and acquisitions activities there is still a considerable problem, which also hindered the further development of China's capital market. Company mergers and acquisitions in China following problems:
(1) Related party transactions serious.
The related transactions phenomenon is very common in China. According to related statistics, in the present circumstances, the share of related party transactions in M ??& A transactions total more than 50%. Related party transactions is likely to result in the purchase of assets between the non-equivalent transactions listed companies with the parent holding company or its affiliated companies, the transfer of shares, asset leasing transactions are often opaque, unreasonable price costs to , the listed company's assets and the interests of a large number of parent holding company transfer. This shift is not only the small shareholders are not due return on investment, and also to make debt service and increased risk of damage to the interests of the creditors.
(2) due to the dominance of the structure of the state-owned shares will reduce the resource allocation function of the capital market.
Due to the dominance of state-owned equity structure, any protocol equity transfer behavior will be state-owned assets management system. The approval process for the transfer of state-owned shares must apply for the shareholdings units of state-owned shares, reported local state-owned assets management department for approval. In this way, the reorganization of assets without the involvement and participation of the government, which intangibles increased administrative intervention in the market, reducing the function and role of the capital market in the allocation of resources.
(3) the operation of the company after the RTO is not standardized.
Mentioned earlier, the "Shell" is a very valuable resource, company mergers and acquisitions in China are most of the motivation of the listed companies in order to obtain the "Shell". Many problems should be corrected in the listed company, due to the the shell listed companies to circumvent the issue of supervision the incomplete assets of listed companies, and the correlation between the largest shareholder transactions and serious problems with the competition.
(4) the performance of mergers and acquisitions is not obvious.
Company mergers and acquisitions performance, both Western scholars or scholars in China studies have shown that the performance of company mergers and acquisitions and the M & A side showed positive correlation, but the performance of the M & A side has a consensus can be reached. This suggests that mergers and acquisitions in terms of M & A side really reached the target of mergers and acquisitions? Reality many examples prove that mergers and acquisitions do not necessarily give the acquirer to create value, but could harm the interests of its shareholders. Mergers and acquisitions is a double-edged sword, while resource integration through mergers and acquisitions, bigger and stronger enterprise must also take into account mergers and acquisitions fail to bring huge risk.

Three pairs of company mergers and acquisitions behavior recommendations

China's capital market is constantly improving, our company mergers and acquisitions are in full swing. Here are my suggestions for the current problems in mergers and acquisitions in China:
(1) improve the M & A legislation to regulate mergers and acquisitions.
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