Study On Supply Chain Restructuring In Core Enterprise's Horizontal Merger And Acquisition

Horizontal M&A has been playing a vital role in the past western mergers and acquisitions. While a series of momentous cases of this kind ended up with failure, various theories of M&A couldn't give a complete explanation of its performance, moreover, there were contradictions in the results of empirical research. Meanwhile, the horizontal integration strategy characterized by supply chain management aroused oppugn against the worthiness of horizontal M&A. Under this circumstance, this paper presents a thorough study on the restructuring of supply chain and influence in horizontal M&A based on the theory of stakeholder, supply chain management and transaction cost.This paper reviews the current literature on the topic of wealth transfer, supply chain cost and the influence on performance of acquiring company in horizontal M&A. Furthermore, the paper analyzes the wealth transfer of supply chain, as well as the impact on supply chain cost and core enterprise performance in horizontal M&A. The paper studies the change of supply-chain structure grounded on sample from horizontal M&A cases of China's listed companies in manufacturing and commercial industry from 2002 to 2004. And it use multivariate linear regression model to test the relationship between the concentration ratio of supply chain and core enterprise's wealth transfer, supply chain cost and performance. In order to maximize the M&A value, all kinds of stakeholder should put great emphasis on the supply chain restructuring and integration so as to make it more efficient, smooth and competitive.The paper indicates, firstly, the concentration ratio of supply chain declines after the horizontal M&A in the listed manufacturing corporations, and it goes down then up in the commercial enterprises. Secondly, core enterprise can affect the bargaining power by changing concentration ratio of supply chain to further have an influence on wealth transfer. There exists a U-shaped relationship between the wealth transferred from its supplier and concentration ratio of core enterprise's upstream supply chain. Correspondingly, the relationship between the wealth transferred from distributor and concentration ratio of downstream supply chain appears an inversed U-shaped (Bell-shaped) profile. Thirdly, by expanding the trading of core enterprise and node enterprises, the operational cost of supply chain can be reduced to some extent. Fourthly, after horizontal M&A, the enhancement of concentration ratio in upstream supply chain helps to reduce the purchasing cost of core enterprise, however, it will be increased once the supplier dominates the market; the reinforcement of concentration ratio downstream supply chain may have an impact on core enterprise income while beneficial to the distributors, unless the core enterprise has the advantage of bargaining power.Finally, It is revealed that the core enterprise can't enhance profitability with the only purpose of expanding its size, or based on its own strength, by means of horizontal M&A. And the consequences of decision-mistake can't be eliminated by enterprise integration after M&A. In conclusion, horizontal M&A has to be carried out well-founded on the awareness of supply chain.