A Study On Selected Reason And Risk Of Private Placement Of Convertible Bonds Under M&A And Financing

Along with the further improvement of the capital market,mergers,acquisitions and reorganizations has increasingly become one of the important paths to achieve rapid expansion and promote the integration of resources.In recent years,although the M&A market in China has developed rapidly,the development of M&A payment in China is relative laggard,now cash payment is still the main method of payment in our country’s M&A transactions,the amount used accounts for more than 80% of all payment methods.In the development process of the M&A market,the disadvantages of payment methods such as cash and shares have gradually become prominent,and traditional payment methods have been unable to fully meet the demands of both parties.Due to the influence of various factors such as the global economic downturn,the domestic M&A market has been developing slowly.Since 2018,the amount and quantity of M&A transactions in our country have started to show a downward trend.The Chinese government has begun to further promote the innovation of M&A and financing methods.On November1,2018,the China Securities Regulatory Commission established the pilot program of private placement of convertible bonds.Once the message was released,it was favored by many companies.The successful introduction of private placement of convertible bonds has enriched our country’s M&A payment methods and is of great significance to promoting the healthy and stable development of the M&A market.In this context,Xinjingang is the first listed company in our country to use private placement of convertible bonds for "M&A payment + supporting financing" and complete the issuance.The study of this case can provide reference to other companies who intend to introduce private placement of convertible bonds as M&A Payment method.This paper first summarizes the theories,concepts and literature involved in this case study,and analyzes the advantages and disadvantages of private placement of convertible bonds as a M&A payment method by combining relevant literature and comparing other payment methods.After that,this paper sorts out the changes in the M&A market,the policy development process of private placement of convertible bonds and the current market situation,and takes Xinjingang’s acquisition of Kuanpu Technology as an example to introduce the background,reasons and process of mergers.Next,this paper makes an in-depth analysis of Xinjingang’s choice of private placement of convertible bonds as a payment method for M&A and the reasons why Kuanpu Technology accepts this payment method,and combined with the payment programs of the remaining 21 sample companies,it compares the issuance requirements and terms of ordinary public convertible bonds,and found that private placement of convertible bonds have achieved great breakthroughs in terms of issuance conditions and the setting of some terms.After that,this paper analyzes in detail the risks of private placement of convertible bonds as a payment method for M&A and countermeasures,and conducts research on Xinjingang’s first announcement of M&A plan and the announcement of modification of M&A payment methods.Finally,this paper puts forward suggestions for the regulators and the M&A parties respectively,and points out the applicable circumstances and precautions of this payment method.Through the analysis of this paper,the following inspirations can be drawn:(1)The application and promotion of private placement of convertible bonds have realized the innovation of our country’s M&A payment method,which can promote the further prosperity and development of our country’s M&A market;(2)As a payment method for M&A,private placement of convertible bonds have many advantages,such as the dual nature of stocks and bonds,high issuance efficiency,low financing costs,and flexible terms,and can meet the different demands of both parties to a greater extent;(3)Before issuing private placement of convertible bonds,the acquirer shall be cautious,determine whether it has the internal and external conditions for issuing the convertible bonds,and avoid blind issuance and M&A;(4)Our country should speed up the promulgation of laws,regulations,policies and systems related to private placement of convertible bonds,so as to provide a strong policy backing for the promotion of this convertible bonds.