Research On The Motivation And Risk Of M&A Payment Of Directional Convertible Bonds

Directional convertible bond is a new payment tool for M & A,which has both the characteristics of stock and debt.When a listed company issues directional convertible bonds for M & a payment,the target party can act according to its own circumstances.If the share price of the listed company is going well,it can choose to convert shares to earn capital gains.If the share price of the listed company is going down,it can also exercise the creditor’s rights and cash the principal and interest at maturity to avoid risks,so as to dispel the concern of the target party,improve the flexibility of the M & a plan and improve the negotiation efficiency.By 2021,27 listed companies in the A-share market had issued merger and reorganization plans,indicating that they would use directional convertible bonds as the payment tool for this merger and acquisition.The CSRC said that it would actively promote the pilot of using directional convertible bonds as a payment tool for M & A transactions,and support various enterprises,including privately held listed companies,to become better and stronger through M & A.Therefore,it is of great theoretical and practical significance to carry out the research on the directional convertible bond as a payment tool for M & A.On the basis of searching and summarizing the literature on the motivation,risk and pricing of directional convertible bond M & a payment at home and abroad,this thesis discusses the characteristics of directional convertible bond and the advantages of directional convertible bond in M & a payment,deeply analyzes the motivation of listed companies choosing directional convertible bond for M & a payment,and explores the possible risks of directional convertible bond M & a payment from the perspective of relevant theories and policies.Taking Leike defense’s acquisition of Hengda microwave as the research object,this thesis deeply analyzes the motivation of directional convertible bonds as payment consideration from the company’s financial status,corporate control,agency problems,market timing,signal transmission,issuance threshold and other factors,and explores the possible pricing risk of low conversion price,financial risk of due repayment of principal and interest,risk of equity dilution,risk of unfulfilled performance commitment,etc;According to the results of case analysis,this thesis puts forward relevant countermeasures and suggestions on the design of M & a payment terms of directional convertible bonds by both M & A parties,so as to provide reference and reference for subsequent companies using M & a payment of directional convertible bonds.