A Study On The Financial Risk Of Hisense’s Acquisition Of Kelon

In the impact of wide-spreading of financial turmoil, the economic slowdown inworldwide and the unsolved conflict among economic lives in our country, there aremore difficulties and pressures in China’s economy and there are also moredifficulties in running the company. Because of this, more and more Chineseenterprises choose the acquisition. The climax of the acquisition began to emerge andcould continue several decades. In the process of acquisition, the financial risk iscomplex. The enterprise need to cope with the financial risks from the estimation ofenterprise value, the financing and payment to financial integration. Besides this, theenvironment also make a great effect on the acquisition of enterprises.Based on the form of case study, the thesis makes a study on the financial risk ofHisense’s acquisition of Kelon, the thesis analyses the financial risk on the valueevaluation, the financing and payment and the financial integration. Then to find outthe problems existed in the financial risk and ways to solve it. The thesis uses manyevaluation methods, such as, Discount Cash Flow, option pricing method andcomparison approach in order to objectively evaluate the financial risk in Hisense’sacquisition with Kelon. Based on large number of financial reports of HisenseAir-condition, Hisense and Kelon and stock price before and after the acquisition, thethesis illustrate the financial impact on Hisense an Kelon. Through the cause analysisof financial risk before and after the acquisition, the thesis found the deep reason of itsfinancial risk and made a conclusion, and at last posed the countermeasures.The thesis is made up of four parts.The first part is introduction. This part included the study background, thepurpose and significance of research, the idea and the method of the study. It mainlydiscussed the general idea of the thesis.The second part is the description of the case. It is based on the introduction ofenterprises and the description of the acquisition.The third part is the analysis of the case. Based on the theory relating to the acquisition, this part made a specific analysis of the financial risk of acquisition,which included evaluation of the enterprise, the financing and payment and thefinancial integration. Then made a deep analysis of the cause of the financial risk.The fourth part is the conclusion and recommendation of the risk control.According to the analysis of the financial risk, this part made a conclusion of the riskcontrol during the acquisition. Based on the financial risk and its causes in the processof the acquisition, this part made specific measures of controlling financial risk. Thenpropose a recommendation of risk control during the acquisition.