On The Financing Activities Of Xiwang Food's Cross-border Mergers And Acquisitions

Along with the fact that China's economies has entered "The New Normal" condition and China's economic growth has shifted from a high speed mode to a high quality one,the companies of China are to respond the call of the national strategy of "Go Globally" ,and are to meet the demands of their own development as well,thereby they start entering the international market doing a lot of M & As actively and massively,seeking for the leading technology,equipment,patents,and the experiences of management from the advanced companies,so the popularity of the topic of the cross-border M & As has skyrocketed since the year of 2015.On one hand,the advanced countries have gone through around 5 waves of M & As,on the other,the practice of China's companies' cross-border M & As has taken the lead so much further than the theory of the cross-border M & As,consequently it's very necessary to do the research on the cross-border M & As.This paper studies the reasons,process,practices,effects,enlightenment and problems of this M & A case,using the method of case study,literature study and normative study.It is composed of three parts:The first part is to specify the concept bases of the financing activities of cross-border M& As including features,fundamental ways and key points.The second part is the case analysis of Xiwang Food acquiring Kerr including the both sides,motivation,reason,process,the financing scheme,successful points and problems.The successful points of this case are "Listed Company + PE" M & A Fund Mode,double SPV structure,"Overseas Loan Under Domestic Guarantee" ,LBO Mode and consecutive debt replacement,which inspires other companies to let PE participate in M & A fund,use LBO Mode and do the consecutive debt replacement.As for problems,Xiwang Food has left 4 problems like prominent financial risk of buyer side,leave hidden troubles of control right struggle,dealing with the foreign exchange regulation difficultly,restricted to new rules of refinancing.The third part is the suggestions targeted at the problems exposed in this M & A case,mainly based on four angles including how to prevent exorbitant leverage,how to use the new financing tools to raise money domestically,how to let the domestic money leave the country quickly and let this act be in compliance with the laws relevant and lastly how to raise money abroad.Therefore the suggestions are:Using "Seller's Financing" Mode,the shareholder Xiwang Group issuing private exchangeable bonds,Xiwang Food issuing convertible bonds,setting extra entity for bridge acquisition and finally Kerr's IPO abroad.The case of Xiwang Food acquiring Kerr is a very successful"Snake Swallowing Elephant" type M & A,in this case Xiwang Food has used comprehensive measures like "Listed Company + PE" M & A Fund Mode,LBO Mode,pledge loan,overseas syndicated loan,debt replacement,"Overseas Loan Under Domestic Guarantee" and private placement.These measures make Xiwang Food succeed in this RMB 3 835 million M & A deal with only RMB 688 million internal funds by leverage,so this case is highly inspiring while Xiwang Food left some hidden troubles in it.This paper helps enriching the research on the financing activities of cross-border M & As,in the meantime,every suggestion this paper proposes is the latest and the most innovative measures referring to the latest policies and practices,also each suggestion is very tangible and targeted so that each one is easy to put into practice.