A Study Of The Strategy And Economic Consequences Of The Snake Swallow Elephant M&A Of Weir Corporation

As the economy continues to develop,mergers and acquisitions(M&A)have become an important means for companies to gain competitive advantage in the marketplace.A special type of M&A-the "snake swallowing elephant" type of M&A in which the weaker company is the dominant party-is becoming more and more common in the entire M&A market.However,disadvantaged companies face great difficulties in merging with dominant companies,and if they are not careful,not only will the merger fail,but also the company itself will be in the mire.As one of the pillar industries for the future development of society,semiconductors are playing an increasingly important role in the world today.The country also attaches more and more importance to the development of the semiconductor industry,many semiconductor companies began to acquire advanced technology through mergers and acquisitions of domestic and foreign high-quality enterprises.Semiconductor and other high-tech industries are often merged with small and large mergers and acquisitions,which are risky and have a high probability of failure,making it difficult to maintain good performance in the long term.Therefore,it is very necessary to analyze the application and economic consequences of the M&A strategy of semiconductor companies in the context of the growing tide of M&A in China.This article discusses the merger and acquisition of Beijing Haowei Technology Co.,Ltd.(hereinafter referred to as “Beijing Haowei”),Beijing Sibico Microelectronics Co.,Ltd.(hereinafter referred to as “Sipee”)and Beijing Shixinyuan Technology Co.,Ltd.(hereinafter referred to as “Cshixinyuan”)by Shanghai Weir Semiconductor Co.,Ltd.(hereinafter referred to as “Weir”)and case study.The paper firstly describes the background of the study,the research methodology,and composes the relevant literature.Secondly,the paper introduces the concept of snake swallowing M&A and the related concepts used in the paper.Furthermore,the paper introduces the semiconductor industry,the main merging party and the merged party,and the M&A process.Then,the motivation of the merger and acquisition of Weir Corporation and the strategy of the snake swallowing elephant merger are studied in four aspects: selection of the target,preparation for the merger,choice of financing and payment method,and post-merger integration strategy.The next part of the paper analyzes the economic consequences of the M&A,examining the capital market’s reaction to the M&A,the synergistic effects of the M&A,and the effects of the M&A using a comprehensive indicator approach.The final part of the paper concludes with conclusions and insights.Firstly,although this M&A is a relatively successful one in general,the motivation of the M&A has not been fully realized: the two goals of corporate transformation and cost reduction have not yet been realized due to the short time of the M&A.Secondly,the listed company to develop a reasonable strategy is the key to snake-swallowing M&A.Companies should focus on target company selection,pre-merger preparation,financing payment method selection and post-merger integration in the M&A strategy.Third,the capital market regards this M&A as good news,and this M&A creates shareholder wealth.Fourth,this M&A has brought growth in profitability and growth capacity for the company,and operating capacity is higher than the industry average although it has declined in 2020 due to the epidemic.While the solvency enterprise is still below the industry average,there is a large financial risk,but due to the good cash flow and liquidity of the merged enterprise,in general,the solvency will also be greatly improved in the future.