The Analyses Of Chinese Security Company Cross-border M&A Motives AndPerformance

The pace of RMB internationalization becomes faster and the level of opening up to the outside world in our capital market is getting higher. Then Polities were published to encourage securities companies to operate overseas. More and more security companies developed or will develop oversea business in the ways of setting up overseas subsidiaries or joint venture, cross-border merger and acquisition and others. Haitong Security M&A of Dafu Security is the first example that Chinese security company developed oversea business by cross-border merger and acquisition. Based on this example, the external reason for Haitong Security Company cross-border M&A was that polities and operation environment encouraged it to make the decision. Haitong Security Company could also increase market shares and had a synergy effect. Around the date of the merger and acquisition announcement, the passage conducted an event study to examine the short time impact and found out both Haitong Security Company and Dafu Security Company had got positive cumulated abnormal returns. The passage also analyzed the long-term performance of this merger and acquisition. It found out that Dafu Security Company performed badly from the beginning because of the economic environment and integration. With the accomplishment of the integration, the company grew fast and the synergy effect has emerged. Therefore, the passage drew following enlightenment from the acquiring security company perspective. Before making the cross-border M&A decision, the company should consider whether M&A is suitable to the company development strategies and what the M&A motives are. In addition, the acquired company is vital for the M&A and the company should carefully choose it according to development strategies and M&A motives. After M&A, the company should pay attention to take full advantage of both M&A sides. The successful experience of Haitong Security Company M&A of Dafu Security Company is useful for the securities company that are looking for M&A target or in the process of M&A integration.