Analysis Of Second Round Mergers And Acquisitions For New Hope Dairy

Newhope Dairy entered dairy industry in 2001 by the first round of mergers and acquisxtions(m&a),through integration of 10 years it has laid a solid foundation.Starting in 2011,Newhope Dairy got a rapid growth with compound growth rate of more than 50%in revenue,and net profit compound growth rate of more than 150%.While in 2015,due to the downturn of global economic and the expansion consumption of imported liquid milk,the dairy industry growth rate fell,Newhope Dairy also encountered unprecedented challenges with slow market growth.Although the industry development was in twists and turns,but along with the growing residents consumption level and increasing urbanization rate,the dairy industry was still in positive development.So the dairy industry was still the preference for funds,investment Banks and other capital market at home and abroad.Type of city dairy companies will expand sales territory through the horizontal m&a to achieve rapid growth,which is the effective way to resist slowing,and the same time further accelerates industry consolidation.In conclusion,the second round of m&a becomes the inevitable choice for Newhope Dairy and its development.M&A theory in this paper is the most practical due to author's actual m&a practice.The theory includs the m&a motives,the main program,valuation method and the merger integration,the four parts are the core contents in industry m&a.Different from the first round of m&a,with different background and environment,the second round of m&a for Newhope Dairy has taken different planning and strategy based on reality.This paper illustrated execution of "Xichang SanMu Dairy" case for analysis,focusing on the motivation analysis and valuation analysis and stressing the income method model(DCF)and market comparison method(P/E).while Facing valuation gap to choose,the two shareholders sides agreed on the target price as far as possible.Market comparison method(P/E)is chosen as the major means of valuation.This paper analyze the reasons for ineffectiveness of the second round of Newhope Dairy m&a.Firstly emphasizing that the target companies are almost private enterprises,which put more attaches on the value of"price",the realistic interests.Valuation deviation constitutes a "feel"that the two sides are difficult to work with.This paper proposes countermeasures,emphasizing the strategic synergy rather than just financial returns,that the strategic m&a should be put in consideration first.Secondly emphasizing to speed up the pace of m&a.Thirdly Puting forward by designing late "return" to balancing transfer price difference for the first time,and further reducing the psychological expectations of each other through the "commitment"performance and installment payment of equity transfer.This paper summarizes the achievements of the second round of m&a,the market share increase and table of financial indicators before and after optimization shows the preliminary result of the m&a in the first year.But facing slow increase and uncertain factors of 2016 m&a progress,the author puts forward suggestions for Newhope Dairy's development for the next step:combination of m&a and the green space construction,layout in three&four line city.Compared to the speed and achievements of the first round of m&a,Newhope Dairy appears insufficient in second m&a around under the new situation.However,this article gaves us a reference of exploration model by m&a practiee from a large&medium-sized dairy enterprise.