Study On M&A Motivation, Patterns And Performance Of Sichuan Listed Companies

M&A(Restructuring) is a generalized concept which includes merge,restruturing and acquisition. During a 20 years developing period of Chinese capital market, M&A(Restructuring) of listed companies is always a hot foucus point, in addition, it's an important method to rapidly adjust China industry structure, optimize industry organization, allocate resources and improve country's competitiveness, as well as a main way to strengthen listed companies, to set up a developing stock market micro fundation and to promote the growth of company value. So, it's theoretical and practical significance to research M&A(Restructuring) of listed companies. This paper try to comprehensive study M&A motivation, patterns and performance of Sichuan listed companies and analysis several problems during M&A(Restructuring) by means of Western industry organization theory, M&A(Restructuring) theory and quantitative analysis.Finally, the policies and suggestions are provided by view of government, supervision department and listed companies.The paper firstly explained and defined the concept of M&A(Restructuring) and the research object and scope. M&A can be divided into board and narrow concepts. The board concept is that stock assets are regulated and re-composed by corparation in capital market, which inculds corparation restructuring, corparation control and corparation ownership change. The narrow concept means a kind of equity purchasing or merge transactions to control the targeting companies. In fact the board concept of M&A includs the narrow concept of restructuring, so M&A and restructuring are called M&A(Restructuring) in documents and practical application. The paper's study object is Sichuan listed companies and their series of M&A(Restructuring) activities including assests exchange, diverstiture, assests implantation or reorganization after M&A and control transfer. In addition, as theoretical foundation of study scope and content in this paper, both industry theory and M&A(Restructuring) theory and a large number of research documents by Sino-Western schcolors are reviewed and commented.In order to study Sichuan listed companies M&A(Restructuring), it is necessary to understand the general charateristics of Sichuan listed companies and their listed background. Firstly, according to various listed terms of Sichuan listed companies, the qualities, problems and M&A(Restructuring)frequency of Sichuan listed companies are different. It clearly reflects listed companies'M&A(Restructuring) are flunced by new stock listed system in Chinese stock market. Secondly, by analysizing financial data, periodic report and temporary notices, it is discovered that decreasing performance , bad corporate governance and shell generally happened after listing. This is the main reason that there is a high frequency of M&A(Restructuring) among Sichuan listed companies.Motivation of Sichuan listed companies's M&A (Restructuring)are: (1) local government's aspiration to keep the shell, maintain local economy and social stability; (2) acquiring companies's desire to expand in industry and promote industry competitiveness and market share; (3) interest of corporate diversification strategy and rapid development; (4) holding shareholder's aspiration of strategic contraction under pressure, idustrial restructuring and exit from capital markets; (5)obtain shell company and financing in capital market.; (6) interest of low-cost assets acquisition.The main patterns applied in M&A(Restructuring) among Sichuan listed companies include: acquisition of equity transfer protocol, judicial decisions or transfer ownership by auction, tender offer, merger absorption. There are 49M&A cases by means of equity transfer protocol which accounted for 69% in altogether 71M&A cases happened in Sichuan listed companies. There are altogether 5 restructuring patterns such as assests exchange, diverstiture, assests implantation, general type and reorganization. occurred in Sichuan listed companies.On the basis of financial data analysis, the paper chooses some Sichuan listed companies which have equity control changes occurred from 2000 to 2005 as the sample companies, and evaluate the operating performance before and after the merger and reorganization changes by view of profitability, viability and solvency. Empirical analysis shows that, generally, M&A(Restructuring) of Sichuan listed companies has made some achievement, but not significant, and do not have continuity. Regardless of asset exchange, diverstiture, assests implantation, general type or reorganization, listed companies generally enjoy a better performance at the first year of rstructuring. Especially, the first year performance of asset exchange, general type and reorganization is significantly better than a simple assets assests implantation. However, in the second year and the third year, performance of all restructuring types fell down obviously, it proves that M&A(Restructuring) is unable to improve listed companies's performance continuously. The study also found that M & A activities has made an important influence on Sichuan listed companies about improving their core business profitability and financial structure. If restructuring is continuous and in-depth, it can not only improve profitability and viability, but also improve liquidity, debt levels and the sustainable development capacity, then a listed company after restructuring will recover it's profitability and will maintain a normal operaton.Problems about M&A(Restructuring) existed in listed companies includs: compared with actual strategic restructuring or industry-optimized restructuring the financial restructuring to keep the equity shell is still very popular among listed companies; In addition, poor M&A(Restructuring) quality, lack of planning, due diligence and integration; assets evaluation agencies did not play a full role of audit quality; information disclosure violations, insider trading and illegal trading are serious; corporate governance is imperfect, boards of directors and general meeting of shareholders are not inflexible on M&A(Restructuring), there will be some significant problems and risks .Problems about M&A(Restructuring) existed in securities supervision department and government includs: securities supervision department should strengthen supervision on listed company M&A(Restructuring); Performance of M&A(Restructuring) does not achieve the desired effect, the survival of the fittest mechanism did not play; Construction of listed company governance need to be promoted; There is short of industry policy to guide and support M&A(Restructuring) as well as a complete legislation about listed company M&A(Restructuring); Local government usually intervene listed company M&A(Restructuring).For above problems and obstacles, Suggestions for government and securities supervision department are: encourage industrial concentration policies and listed company M&A(Restructuring); reduce government intervention of M&A(Restructuring), to strengthen mobility of shell resource and quality assets ; Improve legislation of M&A(Restructuring), adjust and improve the existing management and approval of M&A(Restructuring) under market-oriented model; to strengthen supervision of listed company M&A(Restructuring), and strive to improve the quality of listed company M&A(Restructuring); strengthen intermediary institutions in M&A(Restructuring) supervision and guidance, vigorously played the role of intermediary institutions, innovate rich means of listed company M&A(Restructuring).Suggestions for listed companies and acquiring companies are: through their own initiative, listed companies take an attitude of scientific, pragmatic, and diligence to make a better M&A(Restructuring) work; strengthen the implementation of management and operational synergy and integration after M&A; Improve the quality and performance, continuously improve and optimize corporate governance; constantly promote listed companies in accordance with the norms of operation, improve the information disclosure system and prevent from the risk of M&A(Restructuring) and its derivatives risk.