Analysis On Financing Strategy Of Shuanghui Merging Smithfield

In recent years, China's opening level is further deepening and even joined the WTO, more and more Chinese enterprises have started to go abroad to conduct mergers and acquisitions. They want to obtain raw materials, markets and brands, learning transnational advanced management experience and technology from the transnational advanced enterprises. They can improve themselves this way so that they can do better in the transnational competition. According to PwC 2014 China Enterprise Merger Report,2014 Chinese enterprises completed 215 overseas mergers and acquisitions cases, and the total amount of the transaction is approximately $56.9 billion, the growth in the number of transactions is 36%, transaction amount growth is 10% compared with 2013.Despite the rapid growth in merger and acquisition cases, the failure rate of mergers and acquisitions has always been at a high level. The failure of financing decision is an important cause of the failure of mergers and acquisitions. In transnational mergers and acquisitions, financing decision is a very complex and professional issue, and it is influenced by many factors. Thus the research about transnational mergers and acquisition financing decision has a strong practical significance and necessity. The case of Shuanghui merging Smithfield occurred in 2013, making a record on maximum amount at that time of Chinese acquisitions of US companies. Even this case became the benchmark of Chinese mergers and acquisitions cases. The case of Shuanghui merging Smithfield has many features:a huge amount of money in the transaction, Shuanghui faced with political censorship of the United States government, competitors spoiler, Smithfield major shareholders opposition, which made the transaction more complicated, so the financing arrangements in this case is more skillful. This is why I choose this case to study about transnational mergers and acquisitions financing decision.In this paper, the study and analysis about the case of Shuanghui merging Smithfield financing decision successful aimed to summarize the successful experience, and provide information and reference for Chinese enterprises in the future transnational mergers and acquisitions. This paper used many analysis methods, including case study method, literature study method and qualitative analysis method to better analyze Shuanghui merger Smithfield case. In Chapter I this paper at first analyzed the theoretical basis of transnational mergers and acquisitions financing decisions, including the definition of mergers and acquisitions, acquisition finance and acquisition finance payment instruments classification and their respective advantages and disadvantages, in particular the case for the subsequent analysis of a theoretical basis. Then, in Chapter II the article describes the case of Shuanghui merging Smithfield financing decision, including both companies, the merger transaction, the transaction programs and integration solutions, and this acquisition analysis in motivation on both sides. Next, Chapter ? analyzed the financial decision-making process in the case of Shuanghui acquisition, including determining the estimated funding needs, choosing payment method and financing tools, and the factors considered by Shuanghui in the process to make financial decisions. Chapter IV introduced the financing arrangements of this case, then we analyzed the process of the operating for its leveraged finance. Then we analyzed the potential risks in the financial decision of Shuanghui merging Smithfield, mainly about financial risk, the risk of interest rate change and exchange rate change. After this we gave some solutions to solve these risks, so analyzed the second financial arrangement after the deal was over. Shuanghui Company took debt exchange and IPO to get more money to solve the risk of financial.Finally, the paper summarized the successful experience in Shuanghui merging Smithfield financing decision-making process, and put up some suggestions from the micro and macro levels according to the problem met by Chinese enterprises. The main suggestions are improving the capital market, first take measures to lower the threshold for enterprises to raise money in the capital market; then increase the amount of finical instruments; loose the guard of the government to the finical raising in the process of transnational mergers and acquisitions; further deepening the capital market to the foreigner and try to make RMB more globalization so that one day the Chinese stock can be used in the transnational mergers and acquisitions.The main innovation of this paper is:First, the current domestic study about transnational mergers and acquisitions financing research and literature is not very rich, and most studies are focused on theoretical research, and less for the analysis of specific cases. Therefore, this study has great practical significance. Second, the case of this article is typical. This paper, selected the case of Shuanghui merging Smithfield financing decision. Moreover, the case occurred within three years, so there is a strong timeliness. And this merger transaction is more complex than other cases, it can be used as reference for other corporates. Third, we use a variety of methods, including case study method, literature study method and qualitative analysis method to better analyze Shuanghui merger Smithfield case. Due to my limited academic level and insufficient relevant information, this paper on transnational mergers and acquisitions financial decisions have many deficiencies.