A Study Of Huayi Brothers Media Corporation Diversification M&A Case

Since the reform and opening up,the cultural and entertainment industry has developed rapidly.Film and television industry has risen quickly.M&A has become an important means for the rapid development and expansion of film and television industry enterprises.The two brothers named Wang Zhongjun and Wang Zhonglei founded Huayi Brothers Media Co.,Ltd.,in 1994 and listed on the GEM in 2009.After the listing,Huayi Brothers carried out a series of M&A cases,and developed rapidly to a well-known integrated private entertainment group.In so many M&A cases,there is no lack of diversified M&A cases to achieve the company's strategy.So,weather the film industry's diversified mergers and acquisitions can create value or not,the current academic circles have no uniform conclusion.Therefore,this paper chooses Huayi Brothers Media Co.,Ltd.,which is a domestic film and television entertainment company in China,as the object of the case study on diversification M&A motivation and value.At first,this paper summarizes the domestic and foreign research results of diversified M&A motives and value.Then this paper studies the recent development status of the film and television industry,introduces the characteristics of the film industry and estimates its future development trend.After that,with choosing the two typical cases of Huayi Brothers' diversified M&A,this paper introduces the both sides and the process of the M&A cases.Then,based on the theory of diversified M&A,this paper discusses the motivations of Huayi Brothers' diversified M&A cases,including:opening up the mobile gamer industry chain for scattering the main business risk of film and television industry;using the natural complementary features of films and games to develop the film and game interactive field,and to acquire the synergies;acquiring international capital financing platform to reduce capital costs;enhancing the company's brand value to access to market forces.This paper also uses event research to study the cumulative excess returns of two cases of diversified M&A.Based on the results,the cumulative excess returns on the seven trading days before and after the two announcement days are positive,and it is clear that the capital market has a positive attitude towards these two diversified mergers and acquisitions.And it is expected that M&A will create value for the company.Subsequently,the author widely and in-depth collects and qualitatively analyzes the information and data which may chang after Huayi Brothers mergers and acquisitions Yinhan Science and Technology company and China 9th Health campany.The information and data include the market layout,product categories,operating income,debt financing,tax incentives and so on.At the same time,this paper also uses the financial performance analysis method to quantitatively analyze the synergistic effect of Huayi Brothers diversified M&A.The study found that Huayi Brothers launched interactive video products,and acquired synergies.Meanwhile,mergers and acquisitions for Huayi Brothers brought a lot of net profit,improved the debt financing capacity,and enjoyed the tax incentives.So it can be concluded that the diversification of mergers and acquisitions created the value for Huayi Brothers.Finally,through the study of Huayi Brothers' diversified mergers and acquisitions,this paper puts forward some suggestions and enlightenments for the diversification of film and television industry companies,which has certain reference significance for the diversification of the film and television industry companies.