Analysis On The Motivation And Effect Of Kindly’s Separation Of Kindly Medical Instrament From The Market

Many companies use expansionary restructuring methods,such as mergers and acquisitions,as an important means of improving business results.However,this type of expansionary restructuring is not effective when the company’s business is too fragmented and the variety of businesses increases without generating the corresponding economies of scale.In order to improve the situation,a shrinkage type of restructuring-a spin-off-has been created.Since the SEC promulgated certain regulations on spin-offs in 2019,many companies have been enthusiastic about spin-offs,but since the domestic spin-off market started late compared with developed countries,and is in a long legal gap,there are relatively few cases to learn from,so the phenomenon of blind spin-offs can easily occur.Based on this,this paper selects the case of the spin-off of Shanghai Kindly Medical Instrument Co.to be listed in Hong Kong.From the background of the spin-off of Kindly,the event study method and factor analysis method are used to study the spin-off process,the motivation of the spin-off and the change of the spin-off effect in depth,hoping to provide a reference for the domestic spin-off market.Firstly,we review the domestic and international literature on the motivation and effect of M&A,give the definition of spin-off,and compile the theoretical hypotheses as the basis of the whole paper,including the following four theories: financing theory,management incentive theory,core operation theory,and information asymmetry theory;secondly,taking the current situation of China’s spin-offs as the object of study,we take Kindly and Kindly Medical Instrument as the objects of study,and analyze the process,motivation,and effect of spin-offs.Secondly,taking the current situation of China’s spin-offs,we analyze the process and motivation of the spin-offs in detail,mainly from four aspects,including financing motivation,motivating the management of subsidiaries,promoting the core business and improving the enterprise valuation.The impact of the spin-off on the short-term effect is significant and can change the short-term stock price trend;however,for the long-term effect,although the spin-off can optimize the asset structure of the parent and subsidiary,it has a certain lag and needs to be analyzed with multi-year data;finally,insights and suggestions are given from three perspectives: the case companies,regulators and the proposed spin-off.The significance of this paper is that spin-offs have long been strictly controlled by the SEC,and many companies have blind spin-offs after the official liberalization in2019.We hope this paper can provide theoretical references for the study of spin-offs,supplement the case studies of spin-offs on the existing basis,and provide references for other proposed listed companies.