The Application Of Directional Convertible Bonds In Mergers And Acquisitions

In recent years,with the continuous improvement of Chinese capital market and the drive of economic transformation,the M&A market has developed vigorously,and the scale of transactions has increased significantly.M&A has become one of the important paths for corporate expansion.A reasonable and scientific M&A payment scheme is the key to promoting the orderly development of M&A.However,the existing relatively mature payment methods in Chinese M&A market are mainly cash payment,share payment and "cash + share" mixed payment,which cannot well meet the needs of both parties in M&A transactions.In 2018,under the dual pressures of the overall downturn of the world economy and the US-China trade war,the M&A market was greatly impacted,and the transaction volume and transaction scale decreased significantly.In order to stimulate the orderly recovery of the M&A market,in November 2018,the China Securities Regulatory Commission The "China Securities Regulatory Commission Pilots Targeted Convertible Bond Mergers and Acquisitions to Support the Development of Listed Companies" was released,and directional convertible bonds officially entered the historical stage as a new M&A payment tool.Since the pilot was launched,more and more companies have chosen to introduce directional convertible bonds as a payment tool for mergers and acquisitions.As of December31,2020,a total of 26 companies have successfully issued directional convertible bonds to complete mergers and acquisitions,involving an amount of more than 45 billion yuan.Targeted convertible bond mergers and acquisitions have attracted widespread market attention.This paper selects the case of Huaming Intelligent’s acquisition of Juli Technology as the research object,and deeply discusses the application of directional convertible bonds in M&A payment,expounds its advantages and positive impact on corporate mergers and acquisitions,and makes use of directional convertible bonds for other similar listed companies.Mergers and acquisitions provide reference.This thesis firstly sorts out the domestic and foreign literatures related to directional convertible bond mergers and acquisitions,and then introduces the relevant concepts and theories around the subject of directional convertible bond mergers and acquisitions.Then,based on the case of Huaming Intelligent M&A of Juli Technology,it introduces the basic situation of both parties,industry background,M&A motivation,M&A process,and M&A payment plan in turn,which focuses on the introduction of directional convertible bonds in the plan.Terms and Conditions.After completing the introduction of the basic situation of the case,this thesis mainly conducts research from three aspects: Firstly,in-depth analysis of the advantages of directional convertible bonds as a payment tool for mergers and acquisitions.Compared with traditional M&A payment methods,cash payment and share-based payment,directional convertible bonds have the advantages of relieving capital pressure,delaying equity dilution risk,reducing M&A costs,and better building a mechanism for the interests of both parties;secondly,to conduct a short-term market effect analysis on the case of Huaming Intelligent’s issuance of directional convertible bonds and its acquisition of Juli Technology.Focusing on the announcement days when Huaming Intelligent released two different payment plans as the center,the results show that the market has a positive attitude towards the use of directional convertible bond payment instruments;thirdly,the issue of directional convertible bonds as a payment instrument for mergers and acquisitions analysis of potential risks.Mergers and acquisitions through the issuance of directional convertible bonds may face the risk of centralized redemption caused by the failure of conversion of bonds due to maturity,the risk of equity dilution after conversion,and the risk of policy uncertainty.The bond issuer should establish risk prevention awareness and set appropriate orientation.Convertible bond payment ratio and supporting terms.Finally,the whole text is sorted out and summarized,fully affirming the positive role of directional convertible bond payment in corporate mergers and acquisitions,and at the same time,it also emphasizes the risks it brings.On this basis,relevant suggestions are put forward for the application and development of future directional convertible bond mergers and acquisitions.