Research On The Application Of Private Exchangeable Bonds In Cross-border Mergers And Acquisitions

In recent years,China has actively participated in the process of economic globalization,strengthened economic cooperation with other countries,and promoted Chinese enterprises to go abroad.Actively promoting " Belt and Road " construction,signing the RCEP agreement,and organizing China International Import Expo,etc.These measures show our government’s determination to continuously improve the level of opening up.Under such a background,more and more enterprises carry out their own internationalization path and explore new performance growth points through cross-border mergers and acquisitions(hereinafter referred to as crossborder M&A).In the process of cross-border M&A,the more important issues include financing,payment methods and resource integration after M&A,which are related to the success or failure of cross-border M&A.Among the cases selected in this thesis,the acquirer innovatively introduced private exchangeable bonds into the M&A,which achieved win-win results and provided useful experience for solving the above problems.This thesis discusses the role of private exchangeable bonds in cross-border M&A from multiple dimensions,taking the case of BTG Hotel M&A of Homeinns Hotel group as the starting point.Including event research method,financial index analysis method and nonfinancial index analysis method.Specifically,this thesis uses the event study method to analyze the market response to the use of private exchangeable bonds for this cross-border M&A.The study finds that the cumulative excess return of the BTG Hotel in the corresponding window period is positive.Therefore,it can be seen that the market holds a positive attitude towards this.Using the financial index analysis method,this thesis analyzes whether the M&A with private exchangeable bonds improves the financial index and business performance of the enterprise.The financial indicators analyzed include solvency indicators,operating capacity indicators,profitability indicators and growth capacity indicators,and conduct vertical and horizontal comparative analysis at the same time.By comparing the changes of the above indicators from 2015 to 2020,this thesis finds that in addition to the operating capacity indicators,the other financial indicators of the BTG Hotel have improved significantly,and although the operating capacity indicators have declined after this M&A,they are still higher than the industry average.And this thesis analyzes how private exchangeable bonds act on the above indicators in this case.This thesis believes that in this M&A,private exchangeable bonds have played the following roles:first,helping enterprises obtain low-cost funds.Second,strengthened the transaction willingness of the acquiree and promoted the smooth progress of cross-border M&A.Third,play the role of employee incentive,help enterprises smoothly integrate the resources after M&A,and improve the business situation of enterprises.Use the non-financial index analysis method to analyze whether the cross-border M&A using private exchangeable bonds is conducive to the improvement of enterprise market competitiveness.This thesis selects two important industry indicators for the hotel industry,market share and revenue per available room(hereinafter referred to as RevPAR)By comparing the above indicators of the BTG Hotel before and after this M&A,this thesis studies the impact of private placement of exchangeable bonds.The results show that after this cross-border M&A,the market share and RevPAR of BTG Hotel have been significantly improved,and the market competitiveness of enterprises has been significantly improved too.At the same time,this thesis analyzes how private placement exchangeable bonds act on the above indicators.This thesis holds that the using of private exchangeable bonds promotes the development of resource integration after M&A,stimulates the work enthusiasm of employees,and then improves the non-financial indicators of enterprises.At the same time,based on the comprehensive research results,this thesis also finds the following problems in present practice:first,in the process of cross-border M&A,Chinese enterprises have a single way of payment,and private placement exchangeable bonds have not been fully utilized.Second,the current supervision of private placement exchangeable bonds in China is insufficient,and private placement exchangeable bonds have default risk.Therefore,this thesis puts forward corresponding suggestions:first,enterprises should be good at flexibly setting the terms of private placement exchangeable bonds according to their own reality and strengthening its application.Second,in the mixed reform of state-owned enterprises,the use of private placement exchangeable bonds is conducive to achieving a win-win situation.Therefore,the use of private placement exchangeable bonds can be strengthened in the subsequent mixed reform of state-owned enterprises.Third,regulators should improve the supervision of private placement exchangeable bonds,raise the issuance threshold and reduce the risk of bond default.