An Empirical Study Of China's Listed Companies Merger Exchange Ratio

M & A is not only an important means to raise the competitiveness of the Chinese enterprises, but also a way for Chinese enterprises to be integrated as soon as possible into and to gain a favorable position in the international economy. Hence, it is practically and theoretically significant. With the enactment of the new "Company Law" and the "Securities Act", with the substantial fruitfulness of the share-trading reform, with the introduction of relevant laws and regulations and with the active flow of financial capital represented by the privately-raised international funds, the M&A of Chinese listed companies has entered a new era. 2006 saw 1150 acquisitions which are worth about 286.75 billion RMB. Among the top 10 merged companies in 2006, eight of them were merged and acquired in the form of offering of non-public shares. Convertible merger has attracted more attention with the growing scale of M & A.As the convertible merger is so popularly adopted in the present time, I hold that China's enterprises urgently need to improve the scientific method in convertible merger ratio. This paper mainly focuses on how to determine convertible merger ratio. Convertible proportion in the negotiation of acquisition process is a very sensitive problem, because at present the merged and acquired are primarily state-owned enterprises and naturally it will involve the assessment of the state-owned assets and the loss of state assets. If the price of M & A is too high, the purchaser will not accept; if the acquisition price is too low, it will lead to the loss of the state assets and hurt small and medium shareholders. So choosing a right method to determine convertible ratio is extremely important. Now no convertible ratio is generally accepted, and it is still controversial in theory. Thus there is no perfect method and policy norm, and each method has its advantages and disadvantages. This paper highlights the intrinsic value method to determine convertible ratio, and in the meantime compares the advantages and disadvantages of various methods pointing out the rationality of the intrinsic value method. When discussing in detail the advantages and disadvantages of the cash flow method in determining the value of enterprises, this thesis adopts the case of the sdalco and lzalco absorbed by chalco through convertible merger absorption by means of the intrinsic value in 2007. In the last part of this thesis, based on the lessons and disadvantages of the above mentioned M&A, the author puts forward some suggestions: we should wholly regulate the acquisition process and market environment in terms of the government, enterprises, market, hoping that these suggestions may be of some theoretical value for the practice of our convertible M&A.