Study On The Stock-for-stock M&A Of The Listed Company In China

In recent years, the global M&A grows rapidly. As a useful way to allocate resources optimally, M&A becomes a eternal topic in the capital market. George J.Stigler, an American famous economist has ever said:"None of American large companies grows up through certain degree and form of annexation and purchasing. Nearly no such companies grow up by their internal expansion."The increasing transaction scale and amount of M&A caused the stock-for-stock merger obtain a widespread utilization in the western countries. There are 8 cases of stock-for-stock merger in the global top 10 merger incidents in 2003.This thesis analyzes from the theories to actual use. Firstly, this paper reviews the development of M&A in western countries and China. Secondly, on the basis of explaining what the stock-for-stock merger is, the thesis analyzes fundamental theories. Thirdly, it studies the pricing of stock-for-stock merger, namely the determination of the exchange ratio, which is the key part of this thesis. Finally, according to the situation of stock-for-stock merger in the capital market of our country, the thesis analyzes the characteristics and application prospect of it.This thesis is divided into 3 chapters; the detail contents are as follows:Chapter 1 explains the fundamental theories of M&A., including the definition, motivation and methods of M&A. The motivation theories of M&A consist mainly of economy of scale, efficient theory, market power theory, tax effect theory, and so on. There are three main methods of M&A, i.e. acquisition by cash, acquisition by exchange of stock, and the hybrid acquisition. The stock-for-stock merger has become dominant among them. In the position of the merger enterprise, the stock-for-stock merger can alleviate financing pressure, optimize the capital structure, disperse merger risk and through accounting treatment methods to optimize the financial situation. In the position of the goal enterprise, it can share the stockholder's income of the integrated enterprise and obtain interests of tax revenue.Chapter 2 discusses the determination methods of exchange ratio. The accurateness of the determination of exchange ratio is closely related to the benefits of shareholders and achievement of M&A. The determination methods of exchange ratio include the profit ability based methods, the assets value based methods and the market value methods.Chapter 3 analyzes the application of the stock-for-stock merger in the capital market of China by case research. On the basis of the case research the paper summarizes its characteristics, and puts forward some suggestions. The recent M&A cases in the capital market of China are closely related to the reform of non-tradable shares. The characteristics of the stock-for-stock merger in this period of time are as follows: (1) Complicated relationship between merger enterprise and goal enterprise. They are closely connected in terms of ownership before the occurrence of the stock-for-stock merger. (2) Motivation of M&A. Because of the complex relationship, the motivation theories of M&A cannot explain the motivation of M & A under the reform of non-tradable shares. (3) The determination of exchange ratio. When determining the exchange ratio of M&A in the reform of non-tradable shares in the capital market, the consideration non-tradable shareholders pay to tradable shareholders was also taken into account. (4) The existence of non-tradable shares. Finally, on the basis of the analysis of the application of the stock-for-stock merger in the capital market of China, some suggestions are put forward.