A Case Study On The Merger Of Gezhouba Through Share Exchange By CEEC

Mergers and acquisitions(M&A)among enterprises are important means of consolidating resources and improving the efficiency of industrial organizations.Over the past few years,as the domestic market has matured,stock-for-stock mergers have gradually gained widespread attention as a means of M&A that does not require a large amount of cash flow.The main approach of stock-for-stock mergers is to issue new shares to absorb and merge target companies at a price,in order to obtain high-quality resources and help achieve rapid growth in their own value.In the increasingly competitive construction market in China,most companies are actively attempting M&A to improve their market competitiveness.This thesis selects the China Energy Engineering Corporation(CEEC)and Gezhouba Group Corporation(Gezhouba)stock-for-stock merger case as the research object,analyzing the implementation process of the merger,the rationality of the scheme,and the performance of the merged company.CEEC is one of the top construction contractors in China and the world.This is the biggest merger and acquisition deal on the A-share market so far,and the first instance of a central enterprise listed company’s absorption and merger since the implementation of the three-year action plan for state-owned enterprise reform.Hence,carrying out thorough research and analysis on this case holds significant practical importance.Firstly,this thesis examines and condenses the evolution of M&A,particularly stock-for-stock mergers,in both domestic and international capital markets,drawing upon pertinent theories and literature.This research content and methods are determined by this analysis.Secondly,beginning with the industry circumstances of the two M&A parties,this thesis applies the case study technique to methodically analyze the stock-for-stock merger process,highlighting the dangers and suggesting solutions.Then,from the analysis of internal and external motivations of the entire stock-for-stock merger transaction,the rationality of the stock-for-stock merger plan,the transaction price,the stock swap ratio,and other issues are calculated.To assess the success of a merger,various angles are taken into consideration,including financial performance,market performance,and non-financial performance metrics.Techniques like principal component analysis,comparative analysis,and event analysis are employed to validate the merged company’s performance.Based on the above research,this thesis draws the following conclusions.Firstly,the stock-for-stock merger was jointly driven by internal and external motivations of the enterprise.External motivations mainly came from national policies and regulatory departments,as well as the needs of the industry development situation.Internal motivations came from the development needs of the enterprise itself,and the use of stock-for-stock payment was also in line with its actual situation.The second point to consider is the evaluation of the stock-for-stock merger proposal’s soundness.The analysis reveals that the plan is fundamentally rational,and the computation of the transaction price and stock exchange ratio both fall within the sample range.A positive effect has been seen from the safeguard clause for small and medium shareholders.The assessment of the financial performance of the merger and acquisition encompassed several aspects such as operating efficiency,profitability,debt-servicing capacity,expansion potential,and economic value added(EVA).The findings indicated a continuous improvement in the overall financial outcome.Furthermore,the market performance evaluation yielded positive results for both the excess return rate and the cumulative excess return rate.When assessing non-financial indicators such as brand value,governance effectiveness,and synergies,all indicators indicate a favorable trend.Furthermore,the experience of the CEEC and Gezhouba stock-for-stock merger can provide insights for related enterprise M&A decision-making.