Fendar Technology Acquires Fortnal At A High Premium Analysis Of Cause And Economic Consequences

Mergers and acquisitions among enterprises are an effective way to integrate resources,as well as a way to optimize industrial structure and realize industrial transformation and upgrading.In recent years,the government has introduced a series of policies to encourage companies to become bigger and stronger through mergers and acquisitions.In our country,M&A market presents a booming development trend and the scale of M&A is expanding constantly.With the rise of the merger and acquisition tide,the merger premium rate is higher year by year.In our listed companies,the high premium merger and acquisition seems to be gradually becoming a new "normal phenomenon".However,the higher the merger price is,the greater the risk is likely to be brought.The company will encounter some problems in the process of integrating the acquired party,such as: low efficiency of integration,the effect of merger can not reach the expected effect;It will affect the operating conditions of listed companies,thus violating the rights and interests of many small and medium investors.This is unfavorable to the development of our capital market.This thesis selects the case of Fenda Technology’s high premium merger and acquisition of Fortuna.In 2017,Fendar,which is both in the consumer electronics field,made a big splash when it acquired Fendar at a very high premium,because it bought Fendar at a price of2.895 billion yuan,higher than the fair value of Fendar’s identifiable net assets,thus determining the merger goodwill of 2.545 billion yuan.However,the merger and acquisition did not achieve the expected effect,the continuous losses of Fendar Technology even gave Fendar the hat of "ST".This time,Fendar Technology had no other way to survive,and sold Fendar at the price of 502 million yuan to stop the losses,withdraw funds and focus on the previous main business.This thesis mainly adopts the case study method,supplemented by literature research and data analysis methods,to study the event of the acquisition of Faltech at a high premium.This thesis studies the causes and economic consequences of high premium M&A on sufficient theoretical basis.This thesis first introduces the research background and significance of high premium M&A.By combing the literature on the motivation,influencing factors and economic consequences of premium M&A,this thesis sorts out its own research thoughts and methods and establishes a research framework.Secondly,it studies the concepts related to high premium M&A,M&A value estimation methods,high premium measurement and performance evaluation methods,and theoretical basis of M&A.It lays a solid foundation for research.Secondly,this thesis describes the basic information of both sides of the transaction,the plan analysis of the merger behavior and the definition of high premium.Through the analysis of Fenda Technology’s willingness to the merger,asset evaluation process,performance commitment and payment method,analysis of the merger presented such a high premium.In addition,in order to have a deeper understanding of the merger premium and its value creation,this thesis combines the path analysis of high premium merger and acquisition on corporate performance,uses event study method and Tobin Q-value to study the market effect of the company,and analyzes whether Fenda Technology has achieved the expected synergistic effect and transformation effect through financial data and non-financial data.And compared with the industry situation,comprehensive evaluation of the rationality of its high premium.The study said that Fenda Technology’s high premium acquisition behavior of the market reaction is not good.The economic consequences of this merger are also very negative in terms of achieving transformation effect and achieving synergies.On the whole,the merger of Fendar Technology and Fortnage is a failed merger and acquisition transaction.The expectations at the time of merger and acquisition have not been realized after the merger and acquisition.The rationality of its high premium merger and acquisition is questionable,which is a short-lived price bubble.The main findings of this thesis are as follows: First,the change of market environment is the direct cause of the negative effect of high premium M&A.Second,high goodwill impairment is the root cause of the negative effect of high premium M&A.Third,inadequate synergy effect is an important reason for the negative effect of high premium M&A.Fourth,high goodwill impairment under high premium mergers and acquisitions increases the space of earnings management.In view of the problems exposed in this case,this thesis considers various aspects,and puts forward the following targeted suggestions: First,understand the industry trend of the target enterprise,and reasonably plan the enterprise strategy.Second,carefully choose appraisal institutions and adopt reasonable valuation methods.Third,do a good job of due diligence on the target enterprises and set reasonable and effective performance commitments.Fourth,pay attention to the integration link after the merger and acquisition to give full play to the synergy.Fifth,we will strengthen the review and supervision of mergers and acquisitions by regulatory authorities and introduce an accountability plan.