The Study On Leveraged Buyout Application In Shuanghui International Mergers And Acquisitions Smith Field

In recent years,with China’s rapid economic growth and economic improvement of globalization,global mergers and acquisitions market has become increasingly active,transnational merger and acquisition has become one of the main ways to China enterprises rapid development out of the country.Because the cross border leveraged buyout is easy to realize the scale benefit,can obtain the management benefit and financial benefit and can achieve win-win situation,cross border mergers and acquisitions leverage buyout has been paid more and more attentions by many domestic and foreign enterprises,and it has also been adopted by them.The practice proves that the "the small to the big " mergers and acquisitions has great significance for the enterprise extending development scale,at the same time it has a positive effect on the national economy including help to improve economic efficiency of enterprises,conduciveness to the adjustment of industrial structure,promotion for the development of financial market and conduciveness to change the traditional mode of operation.Therefore,it is of great theoretical and practical significance to study the cross border leverage buyout.This paper selects the case of the leveraged buyout(LBO)between the Shuanghui International Corporation and Smith Field Company(SFD)to study the application of the LBO in China’s enterprises in cross-border merger.The paper reviews the cross-border mergers and acquisitions and leveraged buyout(LBO)theories including the definition,classification,advantages and risks,and describes the basic procedures of LBO,and then introduces the cross-border mergers and acquisitions leveraged buyout(LBO)between Shuanghui International Corporation and Smith Field Company(SFD)especially their specific process including specific process and steps of them,LBO of two companies,and then analyzes the reason of successful LBO between them.According to the case,we get some conclusions and inspiration,and this will be helpful to the future cross-border leveraged buyout for domestic enterprises.Based on the analysis of the leveraged buyout(LBO)between the Shuanghui International Corporation and Smith Field Company(SFD),the leveraged buyout success due to the following:(1)the implementation of mergers and acquisitions including the premise of leverage has a stable and sufficient cash flow,solid mortgage assets and professional investment consultants;(2)taking “the small to the big”means including the correct selection of appropriate timing of the mergers andacquisitions LBO,the correct selection of target enterprise and continuous mortgage of the merger and acquisition;(3)more channels for external financing.Based on the analysis of the leveraged buyout(LBO)between the Shuanghui International Corporation and Smith Field Company(SFD),we can come to the conclusions as following:(1)LBO provides enterprise with a new choice to solve the funds of mergers and acquisitions;(2)LBO provides a convenience for Chinese enterprises to "go out";(3)the essence of LBO is through the implementation of enterprise restructuring and change the structure of property rights.At the same time through the analysis of the case,the following enlightenment can gotten as following:(1)LBO should pay more attentions to the financing channels;(2)risk control should be paid attention to in the use of leverage LBO process;(3)the optimization of the ownership structure of enterprises can be achieved by means of leveraged buyout;(4)in order to increase the success rate of LBO,the international financing risk investment fund should be made full use of in the acquisition process.