Reasons And Economic Consequences Of M&a And Reorganization Of ZhangZe Power Company From The Perspective Of Economic Cycle

Since the year of 2013,China's economy has turned into a new normal,and domestic enterprises seek to develop,expand market share and optimize the allocation of resources by mergers and acquisitions.In recent years,traditional energy companies manage to achieve the goal of economic development by merger and acquisitions,especially under the reverse cycle circumstance.But it has been found that the economic result of reverse cycle M & A is not ideal,because the underlying synergy is difficult to achieve and the merged company usually cannot outperform the market.Therefore,it is necessary to conduct researches in understanding the economic consequences of counter cyclical mergers and acquisitions.This paper studies the case of Acquisition of Powe Plant by Zhangze Electric Power Company,with the consideration of economic cycle theory,over confidence theory and synergy,analyses the economic consequences of the case and provides suggestions.First of all,in a reverse cycle economy which heavily promotes low carbon economic development,a traditional energy company suffering consecutive2-year loss,just the situation that Zhangze Electric Power Company faced with,naturally believes a merger and acquisition of another similar entity is a better way to reboot its trenched bottom line.Second,by a thorough study of the case from the perspective of event outcome,financial performance,economic indication,economic indication and market performance,this paper found that a reverse cycle M&A can bring out a satisfiable economic result in short-term but an obvious unsatisfactory result in long-term.Finally,this paper suggests companies to enhance corporate governance,to accelerate post-merger integration,and to seek government supports.This paper enriches the literature on the economic consequences of M & A from the perspective of inverse cycle,provides a micro case support for the conclusion of existing empirical research literature and offers practical and valuable suggestions and reference for China's energy listed companies to optimize the economic consequences of reverse cycle M & A.