Study On The Motivation And Consequence Of China Tianying’s Divestiture

Environmental protection industry,as the basic industry of ecological and environmental governance,has experienced steady growth over the past few years thanks to national policies and economic progress.However,with the increase of state-owned environmental sanitation enterprises,many private giants such as Huawei and Vanke have begun to target the environmental protection industry.The environmental protection industry is no longer dominated by foreign capital and traditional environmental protection private enterprises,so the competition within the industry continues to be fierce,and the threat to established environmental protection enterprises is significantly intensified.If the established environmental protection enterprises want to achieve long-term development,it is inevitable that they can’t do without timely adjustment of corporate strategy,and it is an effective way to analyze the shortcomings of their own capital structure to carry out merger and reorganization.Recently,the number of Chinese enterprises making strategic adjustment through divestiture is increasing.At present,the theoretical research on asset divestiture in China is still in its infancy,and there is a dearth of practical experience in the utilization of asset divestiture strategies for listed Chinese companies.Moreover,asset divestiture is affected by various factors such as regulatory,policy,legal,and economic environment,still faces a series of challenges in its specific implementation and application.This paper takes China Tianying Co.,Ltd.(hereinafter referred to as "CNTY"),a listed company in the environmental protection industry,as an example to study the behavior of divestiture by selling all the shares of Urbaser,a Spanish company controlled by 100%.This paper analyzes the motivation and consequence of stripping off Urbaser after the merger and acquisition.Through the case study of asset divestiture in this article,some conclusions are drawn.Firstly,the divestment of CNTY is aimed at enhancing its financial position,thereby optimizing its capital structure,reducing debt ratio,reducing goodwill,and promoting its development by focusing on domestic environmental protection and expanding into new energy sectors.Secondly,asset divestiture enables CNTY to successfully adjust its business structure and market layout,improve it’s financial situation,and facilitate the company’s investment in innovation as well as the promotion of its long-term value.Finally,this paper summarizes the shortcomings of the case,and draws several enlightenments from the aspects of company operation and management,asset divestiture decision,information disclosure and risk prevention.The research contribution of this paper is to enrich the academic research cases related to asset stripping,help stakeholders more comprehensively understand the positive and negative impacts of asset divestiture events on companies,and provide certain reference for other enterprises to better carry out asset divestiture.