The Influence Of M&a On Target Firm Value

Issues of business mergers and acquisitions are always the key points that are paid attention to by the academic circles. Whether M&A can obviously increase the value of corporations is becoming the hot point studied by scholars at home and abroad. Especially as the economic competition becomes more and more furiously, M&A have been the new trend of the world iron industry. The speed of the M&A of our domestic iron industry accelerates obviously too. In 2009, the state Council unveils detailed rules and regulations of iron industrial restructuring and revitalization plan in succession, which mean to promote the business combination, cultivate large-scale and super-huge type iron groups which have strong international competitive power, and enhance concentration ratio.It is of great significance to study the value influence of the mergers of iron industry on Target Company in this background. We can conclude as the M&A value effect theory on one side. Studying the M&A value effect of our iron industry provides the theory basis to the study of the influence of the merger of iron industry on the value of the company. On the other side, through analyzing the marketing inflection of the merger before and after and the long-time change of financial target, we can make objective and accurate conclusion of the merger effects of our iron industry companies or even resource companies, which can provide reasonable and realistic references to the merger strategy of our resource companies.This paper makes use of the earlier completed merging event of our domestic iron industry, that is, Bosteel Group acquires Bayi Iron and Steel Group. Through the study of the influence from the acquisition on the value of Bayi Iron and Steel Group, we can learn the value influence from Trans-regional mergers of Chinese iron industry on Target Company, thus to study the problems, risks and countermeasures that iron industry will meet. The first part of this part is introduction, which discusses the background, meaning, methods and the structure plan of the study. The second part is theoretical basis and literature review. It firstly discusses the definition, types and the reasons of M&A. Then it reviews the literatures of the theory research of the M&A of industry to the value of Target Company. The third part discusses the general situation of the company and the procedure of the M&A. It emphasizes the general situation of the Target Company– Bayi Iron and Steel Group after the M&A, and then it introduces the procedure of Bosteel Group's M&A. The short-time influence of the M&A on Target Company is in the part four. In order to study it, this part adopts event study to observe the abnormal returns and the cumulative abnormal returns of Bayi Iron and Steel Group and also makes test. Event study is with the view to the share price change of the short-time market, and observes the market reflection to the M&A of the Target Company. The result shows to increase the value of the Target Company - Bayi Iron and Steel Group in short time and to enhance the shareholders'wealth. The fifth part discusses the long-time influence of the M&A on Target Company. In order to study it, this part adopts financial target study, which makes main use of the data of the financial statements from the Target Company and the analysis of the charts. The result shows that the financial targets of the Target Company - Bayi Iron and Steel Group don't make obvious improvement after the M&A. It means that long-time M&A don't sharply increase the value of the Target Company and don't enhance the shareholders'wealth. The sixth part is about the conclusion and suggestion of the study, which concludes the study results and put forward some suggestions and countermeasures to increase the value of the Target Company through the M&A according to the results. It at the same time points out the limitation exists in the study.