Research On The Merger Motivation Between Huya Inc. And Dou Yu International Holdings Ltd.

In August 2020,Huya Inc.(NYSE: HUYA)and Dou Yu International Holdings Limited(Nasdaq: DOYU),two giants in the internet live streaming industry,announced their merger agreement.After the merger,they will become oligarchic live streaming platform with more than half of the market share,which reshaping the competition pattern of the industry.The purpose of this thesis is to study the motivation of the merger of Huya and Dou Yu,whether it is to gain market power or to improve the efficiency of the company.The former may bring monopoly profits to enterprises,but it will damage the overall well-being of the industry and even the society,which will be interfered by the government.The latter can improve the using efficiency of enterprise resources,which is beneficial to the healthy development of the industry and is encouraged by the society.This paper takes this largest horizontal merger in the live streaming industry as the research object to study its motivation for merger.The article bases on the market power theory,efficiency theory,and synergy theory of corporate mergers and acquisitions,using literature research,event study,and case study to analyze the cumulative abnormalities of the acquirer,acquired company and its competitor's stocks during the period of merger announcement and the anti-trust review.The merger motivation between Huya and Dou Yu is judged based on empirical evidence of market.After that,the article further analyzes the motivation and its realization path from the perspective of quantification and non-quantification,as the evidence for the establishment of the previous judgment.It is found that the statistical results of the event study are more consistent with the efficiency theory,that is,the merger is intended to enhance the overall efficiency of enterprises and gain synergy effect.Through further analysis from quantitative and nonquantitative perspectives,this paper finds that the combination of Huya and Dou Yu can form the path to achieve the synergy effect.In terms of managerial synergy,it can improve the efficiency of asset operation and profitability.In terms of operational synergy,it can increase income,reduce cost,optimize business model,etc.Therefore,the further analysis results are consistent with the empirical evidence of market,which can be used as evidence to support the view that the motivation of merger is to obtain efficiency and generate synergy effect.Many scholars only have a deep research on the motivation and performance of M&A in the Internet industry,but there is less research on the emerging but significant live streaming industry.There are few existing studies on the motivation of this merger case due to the merger transaction has not yet been completed and the transaction structure has not yet been fully finalized,plus the merger encounters the antitrust review by the national market supervisory authority.Moreover,the research results of the thesis have important reference value for the related anti-trust review.It also has more practical significance for the practical operation of M&A decision makers.