Evaluation For Financial Performance Of Suning Appliance M&A Redbaby

In market competition, survival of the fittest is always the only rule, especially for competitive traditional retail industry. Since the financial crisis in 2008, the intensity of market competition continue to rise. With further reform of economic system of our country, the enterprise begin its structural adjustment and the formation of the behavior of the scale effect through merger and acquisition activity is becoming more and more frequent.In recent years, the growth of traditional retail sales is slowing, especially household appliances frustrated. Which makes Suning started from electrical appliances urgent to accelerate the transformation and seek new development path. Unlike traditional retail, with the rapid development of Internet technology and the sharp increase in China’s Internet users, online shopping is gradually becoming a new way of life. Several big electric business occupied more and more retail market share, such as Tmall and Jingdong. China’s online shopping market maintained a rapid growth trend, which makes the entity retail transformation face huge pressure of competition and challenge. In this economic and industry situation, Suning put forward its decade development strategies “the transformation of science and technology and intelligence service ". On September 26, 2012, Suning appliance announced its full acquisition of Redbaby, which aimed to combine its entity and online market and rich its business form.However, M&A always is a diverse and complex activities, whose success depends on many factors. Its performance including market forces, strategy implementation, financial performance, operation and management, and many other reasons. So we can’t evaluate M&A performance easily. This thesis, which based on the financial perspective and in the form of case analysis, is going to evaluate and analysis the M&A between Suning and Redbaby. Then put forward relevant inspiration according to the results of the analysis, which has feasibility and practical significance.This thesis adopts the method of literature research and case analysis method. First of all, from the perspective of the development of merger and acquisition activity and retail transformation pressure, it put forward the economic and industry background of this M&A event, also introduced the following mergers and acquisitions subject research status. Then it construct a theoretical framework from the two aspects of M&A and financial performance of M&A. The motivation theory of M&A mainly contains efficient theory, market power theory, transaction cost theory and the theory of environmental drive. And M&A financial performance evaluation methods mainly include event study method and financial index method. Then it introduce the M&A case from two parties, the background and motivation. The principal part of thesis use event study method and the method of financial indicators to evaluate the M&A financial performance of this case respectively from both short-term and long-term. The event study mainly use the share price as its evaluation index, and calculate the cumulative abnormal return after the M&A happened with short-term stock price changes. And financial indicators method is selecting the appropriate financial indicators from the debt paying ability,operation ability, profitability and growth ability four aspects. First construct evaluation index system, then use the principal component analysis(PCA) to index integrated treatment and analysis its movements, and analyzes the reasons of changes. Finally from the perspective of acquiring firm, this thesis puts forward relevant inspiration of merger and acquisition activity.