| As Chinese manufacturing enterprises move towards the direction of intelligence,household appliance enterprises that have fallen into business development bottlenecks have entered an era of shifting from price competition to technological competition.After years of integration,the household appliance market has become increasingly competitive.In order to meet consumers’ demand for high-end and intelligent products and realize its strategic intention in the field of washing machines,Midea chose to acquire Wuxi Little Swan.This article focuses on Midea Group’s M&A motivation,post-merger capital market reaction,Midea’s financial performance and post-merger Midea Group’s corporate value evaluation.What’s more,providing suggestions for other manufacturing companies on horizontal mergers and acquisitions in market segments.Based on the status quo and development prospects of the household washing machine industry,this paper starts from the development strategy of Midea Group,and combines the synergies,economies of scale and market power theories sorted out in the literature review.We find that the M&A strategy is one of Midea’s important corporate expansion strategies.The acquisition of Little Swan is in line with its strategic goals.Little Swan’s abundant cash flow,high-value brand effect and advanced technology can bring strategic,financial,operational and technical synergy to Midea Group.Secondly,using event research method,financial index analysis method and value evaluation method respectively,a performance evaluation system of "market response+financial performance+value evaluation" was established to analyze the M&A performance of this case.The study found that Midea’s acquisition of Little Swan was in line with the long-term expectations of the capital market,played a financial synergy and increased corporate value.With the help of Little Swan’s brand influence,Midea Group has opened the door to the high-end market in the washing machine field,expanding the scale of revenue and capturing high profits at the same time.The excellent R&D team has provided the impetus for Midea to build an "Internet+" smart household platform and its fullbrand strategic layout.Sufficient cash flow has optimized Midea’s ability to deal with financial risks,and the optimization of resource allocation has improved the overall operation and management efficiency of the group.The addition of Little Swan is conducive to Midea’s synergy,expanding its market power,narrowing the gap with Haier,and consolidating its leading position in the industry.Through this case study,it is found that giving full play to the synergistic effect is the strategic orientation of the target company during horizontal mergers and acquisitions in the industry,and the integration link after the completion of mergers and acquisitions is the basis for realizing long-term merger and acquisition benefits.The relationship or commonality between the acquirer and the target M&A enterprise can accelerate the sharing and integration of enterprise resources,especially in terms of R&D technology,which can give full play to resource advantages,realize value creation,and maximize the value of the merged enterprise.Midea’s acquisition of Little Swan,as a typical case of horizontal mergers and acquisitions,provides a good example for the scale expansion and development of manufacturing enterprises. |
