Motivations And Performance Evaluation Of Cross-border Mergers And Acquisition

The diminishing of the domestic population’s dividend has caused Chinese enterprises to experience a gradual decline in development.Enterprise leaders have been faced with the quandary of "Where to develop?" and "How to develop?",due to the advent of the "the Belt and Road" and the ongoing advancement of globalization.This has led them to focus on foreign markets,with Internet enterprises being especially active.In the early stage,the relevant technologies in China were not perfect.Breaking through the defense of foreign enterprises and acquiring advanced technologies were the focus of many Internet enterprises eager to develop.After all,for such enterprises,only with technology can they think about the future.Given the conditions,cross-border mergers and acquisitions are of great significance.Consequently,this paper examines the cross-border M&A of businesses from multiple perspectives.The objective is to uncover the origins of cross-border M&A and its subsequent performance,with Tencent’s acquisition of Riot Games as the primary focus of targeted analysis.An in-depth analysis of Tencent’s acquisition of Riot Games is conducted,beginning with a fundamental examination of financial indicators,followed by an event research approach and EVA evaluation technique.This analysis is then extended to three aspects: basic,short-term,and long-term.Firstly,in the basic analysis of financial indicators,Tencent’s basic financial situation from 2006 to 2019 was considered,and a horizontal comparison was made with relevant enterprises in the industry to determine the positive impact of cross-border mergers and acquisitions on the enterprise,and non-financial indicators were used to supplement the explanation.Then,It was determined that cross-border mergers and acquisitions had a beneficial effect on enterprises.Exploring the effect of the merger and acquisition on the stock prices of enterprises in the short term,this paper employed the event study method in its market response analysis.Results revealed that Tencent’s stock price had a negative growth trend following the merger and acquisition.Therefore,we also introduced EVA evaluation method to analyze Tencent’s economic value added from 2010 to 2019.After removing the impact of policy and other environmental factors,we can see that Tencent’s economic value added has been rising after the merger.Finally,we analyzed the continuous influence of Tencent’s acquisition of Riot Games and found that its influence is still continuing.Based on the above results,we can draw the following conclusions: Tencent’s acquisition of Riot Games has different results from a long-term and short-term perspective.In the short term,mergers and acquisitions have led to a decline in the share price of enterprises and brought losses to shareholders.On the contrary,in the long run,the benefits of corporate mergers and acquisitions to shareholders are steadily increasing.Basic analysis of environmental impact and financial indicators,This paper posits that cross-border mergers and acquisitions can have a beneficial effect on businesses.In conclusion,this paper draws inspiration from many aspects and provides certain help for other Internet enterprises to carry out cross-border mergers and acquisitions.