Convertible M & A Research

George J?Stigler ,American famous economist and also the Nobel Prize winner in economics, wrote in the beginning of his paper The Way to Monopolization and oligopoly---Annexation:" That an enterprise becomes a giant enterprise through annexing its competitive adversaries is a protrusion phenomenon in modern economic history"," None of American large companies grows up through certain degree and form of annexation and purchasing. Nearly no such companies grows up by their internal expansion." So, it is clear that enterprise annexation and purchasing is a common behavior in the world economy, and it has become means and manner for enterprises to expand scale, adjust industrial structure and improve operation and management. Annexation and merging generally needs a lot of funds. When an enterprise has not enough funds, but it is good time for purchasing, a special purchasing manner--stock replacement annexation and merging can solve this problem. Starting with the basic theory of stock replacement annexation and merging, this paper aims to analyze several practical problems in stock replacement annexation and merging and finally discusses a practical case.The entire paper is arranged with theory before practice and tries to make them closely combined, in the purpose of summarizing the general rule of stock replacement annexation and merging to instruct the author's practices. This paper is composed of the following five chapters.Chapter 1 The existing value of stock replacement annexation and merging in ChinaStock replacement annexation and merging refers to the annexation of master annexation company barter the shares of object company through issuing new share( or storage share). It is featured by :(1)it isunnecessary for the master annexation company to pay large amount of cash, so its status of funds will not be affected;(2)After annexation, the shareholders of objective company will not lose their rights and interests. They will still have legal rights and interests as new shareholders in the new company. The shareholders of new company are composed of those of master company and object company, but the original shareholders of the master company occupy dominant position in operation and control right. Starting with the basic concept of enterprise annexation, this chapter compares and analyzes the advantages and disadvantages of several commonly existing annexation manners, further discusses the necessity and possibility of implementing bartering shares annexation in China, thereby revealing the existing value of bartering shares annexation in China.Chapter 2 Value analysis and fixing the price of object company in bartering shares annexationIn bartering shares annexation, the evaluation and fixing the price of the value of object company is of vital importance to the success of annexation. Like any annexation manners, the problems of performing value evaluation and fixing price of master company and annexed company also exist in implementation of annexation. The method of evaluation and fixing price is in accordance with other annexation forms. In this chapter; the value composition of object company is first analyzed, then such evaluation method as discount method,P/E ratio method and assets value method for evaluating the value of object company are introduced; Finally, how to determine the annexation price in bartering shares annexation is discussed, i.e., to ascertain the highest price acceptable for master annexation enterprise, the lowest price acceptable for annexed enterprise and the equilibrium price acceptable for both parties.The value evaluation and fixing price for object company is a veryimportant link in bartering shares annexation. However, due to the limited length of this paper, it is only qualitatively described.Chapter 3 Determination of the proportion of bartering shares in bartering share annexationThe determination of the proportion of bartering shares is an important decision in bartering share annexation and how to determine pr...