The Case Study To The Serial M&As Performance Of P Company

With the development of Chinese capital market, the activity of M&A gradually becomesan important method to seek the fast development of listed companies. There are data showsthat the global M&A transaction amount is$2.8trillion in2012, China ranked second and hasthe highest growth in the world. Chinaventure statistical data show that the transactionamount of Chinese M&A market is$332.85billion in2013, and the number of transactions is4496. The transactions of the Chinese M&A market has become increasingly active, theproportion of the company which has several M&A also has been growing. Through more andmore companies use M&A as a way to expand and improve the core competitiveness, theM&A performance is keep going down is very worth to study.P Company is a private telecom operator in China. It started offer the telecomvalue-added service by purchase a small telecom company. And it was fast becoming one ofthe larger private telecom operators in China through continuous acquisition. But the trend ofP Company’s ROE is very different from its increasing income scale, and this phenomenon isrelated to the continuous acquisition. Therefore, the purpose of this study is to explore theimpact on corporate performance by serial M&As.This article will classified the domestic and international research results by motives,performance and influence factors on M&As in Chapter I. Chapter II will introduce theinformation about P Company, the industry of broadband access and the phenomenon that theincome scale is going up but ROE is going down since2005. Chapter III will use sequentialsubstitution to find out the reasons that influence P Company’s performance. It turns out thatthe scale and scope economies have not be achieved, problems of post-merger integration, thehigh proportion of assets which have not produce economic value yet, low utilization rate ofcapital are the main reasons. At last, Chapter IV puts forward some enlightenment accordingto the previous analysis. For P Company, improving the utilization of fixed assets and capital,speed up the post-acquisition integration and looking for the cooperation in buildingbroadband resources are the effective ways to solve the declining ROE at the moment. Forbroadband access industry, it should pay attention to being clear to company’s strategic, tryingto extend the broadband industry chain and avoid the blind expansion.