Performance Analysis Of Midea’s Acquisition Of Wuxi Little Swan

Midea announced the acquisition of Wuxi Little Swan through privatization,which has been connected to Midea for more than ten years,on September 10,2018.This is a strategic merger plan for Midea to break through the bottleneck of the two companies’ development in the field of household washing machines.This article focuses on these aspects to carry out research: business performance brought by M & A to Midea,changes in the company’s overall financial capabilities,and capital market response to M & A events.It is intended to provide a certain reference experience for the manufacturing industry in the mature period to carry out in-depth integration of market segments.Based on the operating synergy and financial synergy in the synergy theory,and the market power theory,considering the current status and development prospects of the domestic washing machine industry,this article analyzes the motives of mergers and acquisitions from two aspects: the timing of privatization and the strategic layout of the enterprise.Then through the use of case study method,financial and non-financial comparative analysis method and event research method to analyze and evaluate the performance of Midea’s acquisition of Wuxi Little Swan.The research conclusions are as follows: In terms of operating performance,Midea(series)washing machines have improved their domestic market share,average product price,and TOP10 brand brand share after the merger,the transformation of technical results has accelerated,and the company’s operating capabilities,profitability and cost control capabilities have all been enhanced.In terms of financial capabilities,the addition of Wuxi Little Swan,which has sufficient cash flow,has reduced the Group’s financial risks and improved the efficiency of the use of funds.The problem of excessive related party transactions over the years between enterprises having been completely resolved has enhanced the growth ability of the company.The performance of the merger has benefited all shareholders of Midea and the former Wuxi Little Swan.In terms of market effects,although the M&A event failed to increase Midea’s shareholder wealth in the short term,it shows a positive wealth effect in the 17-months event time window.It is reasonable for Midea’s stock price to fluctuate in the short term due to emotional disturbance,the capital market is optimistic about Midea’s acquisition of Wuxi swan.This M&A activity has improved the overall value of Midea and the overall market share of Chinese washing machine brands in the domestic market.