Del Share Debt Acquisition CCI Case Study

In order to meet the needs of corporate strategic development,mergers and acquisitions have played an important role in the development of enterprises in recent years.As the domestic economic growth slows down,some highly cyclical industries are severely affected by economic fluctuations,as is Del's shares in the auto parts industry.Dell is a company that manufactures steering pumps for automobiles.Although it has accumulated rich experience,capital and a certain market size in the industry,its products are too single and threatened by new technology substitution.In order to pursue the transformation and upgrading of the company,Del shares focused on overseas markets and successfully acquired CCI,a company in Germany that produces automotive noise reduction and insulation products.However,the merger and acquisition of Del shares took a debt-based approach.The original target company was insolvent for two consecutive years before the merger.Debt-based acquisition refers to a method of acquisition in which the acquirer acquires control of its company on the condition that it assumes all or part of its debts in the event that the acquiree is insolvent.In the past few decades,debt payment methods have rarely been used in the capital market.The top two are cash payment and stock payment.However,we can still see debt-based acquisitions in the market today.For what purpose did the acquirer choose this kind of M&A payment method willingly to bear the debt risk? What is the motive for it?With the above questions,this article introduces the case of Dell's acquisition of CCI.Taking debt-based acquisitions as the starting point for research,the following research conclusions are drawn through a series of analyses: Although debt-based acquisitions have a series of M&A risks that deserve our attention,for specific M&A purposes,M&A practitioners can In the early stage,increase the investigation of the target companies,evaluate whether they have the ability to undertake debts from multiple perspectives,and evaluate whether there is the possibility of resource integration after mergers and acquisitions to control the risks of mergers and acquisitions.A series of problems,such as the selection of debtor objects,the design of M&A transactions,and the source of funds for M&A;and after the debt is undertaken,the financial structure of the target company is adjusted,then the purpose of the M&A transaction can be achieved.The case study in this article also provides ideas for how to find potentially good underlying assets.