A Case Study On The M&A Between Chunhui Co. And Tong Dai(Hong Kong)

The Party's Central Committee proposed to expand the overall demand and push forward the supply-side structural reform which become an important strategy of the 13 th Five-Year Plan.The party's 19 th report pointed out that in the implementation of new development concepts,the construction of modern economic system to deepen the supply-side of structural reform was in the first place.At present,traditional industries have overcapacity and it is out of balance between effective supply and demand.Most of traditional manufacturing enterprises are facing difficulties,such as solve the problem of overcapacity,overcoming the transformation and upgrading battle.Through mergers and acquisitions(M&A),enterprises can solve the problem of overcapacity,at the same time they can find new revenue and profit growth point,and finally achieve transformation and upgrading.This paper studies the case of M&A between Chunhui Co.and Tong Dai(Hong Kong).Through valuation adjustment mechanism,Chunhui Co.acquired Tong Dai(Hong Kong)100% equity and successfully transformed from chemical fiber industry to rail equipment manufacturing industry.Firstly,this paper describes the research background and significance,then reviews and summarizes the domestic and foreign theories on mergers and acquisitions,cross-industrial merger's risks,valuation adjustment mechanism and so on.Secondly,the paper describes in detail the background and company situation of Chunhui Co.and Tong Dai(Hong Kong).At the same time,it describes the process of M&A from three aspects,such as preparation stage,merger implementation stage and merger integration stage.Thirdly,the paper analyzes the results from four aspects,such as the motivation of mergers and acquisitions,the establishment and realization of valuation adjustment mechanism,the integration of mergers and acquisitions,and the performance of mergers.It analyzes the reaction of market to mergers and acquisitions through event research method,analyzes the financial status of the company after the merger by means of financial index method,and probes into the long-term performance of the company and the results are positive.Finally,the paper combines the case to summarize the revelation of this merger and draws the following conclusions:1.The M&A between Chunhui Co.and Tong Dai(Hong Kong)was a successful case.Chunhui Co.achieved a transformation through this M&A.The market has expressed strong support for this merger.The financial situation of Chunhui Co.has been greatly improved.2.In the process of M&A,the rational formulation of M&A and valuation adjustment mechanism can reduce the risk of M&A and protect the interests of shareholders.3.After the merger,the enterprise should pay attention to the merger integration,clear the company's development strategy so that the synergy effect can be fully utilized.