Research On Convertible Merger Of Motives, Exchange Ratio And Value Effects

Since the late 19th century, Western countries have experienced five large M & A waves. The economic development drives the development of mergers and acquisitions, and it shows the features of expanding trade, increasing amount of the transaction, innovating the trading tools and trading in various forms. Convertible merger is defined to achieve the control or influence of other enterprise by means of stock as payment of mergers and acquisitions. Convertible merger can produce tax avoidance effect, M&A is not restricted by the scale of enterprise funds and financing capacity, and the combined companies can retain their ownership interest, continue to share the future growth and income of the companies, and achieve the growth effect of stock. These advantages have made the convertible merger swept the globe in the increasingly liberal international financial environment, especially in the context of liberalization of financial services trade, since the 90s of the 20th century. Compared with the Western countries, history of convertible merger in our country is not long, nor is the case of business combination many. In June 1999, listed company Tsinghua tongfang and non-listed company Luying opened the prelude of convertible merger; In September 2002, China Securities Regulatory Commission Regulatory Commission promulgated the《Administrative Measures for Acquisition of Listed Companies》and with the support of the《change of Shareholdings in Listed Companies Information Disclosure》, which laid the foundation for the large-scale implementation of the convertible merger; In April 2005, the China Securities Regulatory Commission issued the notice of split on the reform of listed company issues, and started the work of split share structure reform. Along with the basic completion of the share reform and the coming of tradable securities market era, the eradication of equity pricing long-standing abuse make the convertible merger have more extensive room for development. Implementation of these policies promotes the development of convertible merge in China, but on the whole convertible merger is still in the exploratory and concluded stage. It needs to improve and perfect the determination of the conversion ratio, the evaluation of value effect and the information disclosure and accounting methods. Therefore, in this period, it is particularly important and urgent to study convertible merger, summarize and evaluate the experience and lack of the existing cases, and provide policy recommendations and reference for the practical operation of listed companiesThis article is divided into seven chapters, the contents of each chapter are as follows:Chapter 1 is the introduction part, it mainly introduces the background, significance of the topic, research ideas and frameworks, research methods and the problems of thesis writing.Chapter 2 is the literature review section, it mainly introduces the domestic and foreign scholars'research about the convertible merger.Chapter 3 analyzes the motives of convertible, it firstly introduces the motives of the combination of traditional corporate, on this basis, it also highlights the direct cause of the convertible merger.Chapter 4 describes the merger exchange ratio, which is the core issue of the convertible merger. Because the method of determining the exchange ratio is still controversial, we chose four common methods to introduce this.Chapter 5 introduces enterprise evaluation methods after convertible merger. Listing the traditional analysis of financial indicators and stock analysis, EVA and MVA, it mainly introduces the principle of the background, calculation formula and the scope of their respective advantages and disadvantages of these several methods.Chapter 6 is a case study, which is also the key part of the paper. This article selects the case that Tanggang combines and absorbs Handan Iron and Steel and Chengdefantai, it firstly analyzes the motivation of convertible merger; secondly it tries calculating the exchange ratio following with the fourth chapter which describes the conversion method for determining the proportion of cases, and compares with the actual exchange ratio; Finally, it uses the several ways in Chapter V to measure and evaluate the company value effect of Hebei Iron and Steel from different angles.Chapter 7 summarizes the case and combines with the aforementioned theoretical analysis and the specific situation of our country to provide policy recommendations for promoting development of convertible merger.The main contribution of this paper is to combine theory and practice to avoid falling into a simple theoretical analysis. In the case, it uses the existing methods to provide policy suggestions and measures to promote the development of convertible merger based on the evaluation of cases. Which have certain reference significance for convertible merger of listed companies.The drawback is that the accounting treatment and disclosure of convertible merger study don't address the important issues; the accuracy of some data processing is not enough; the study of involved motives, exchange ratio and the value effect is not deep, so it needs further efforts to perfect it.