| China’s pharmaceutical industry, because of its strong earnings growth, has become the main investing area of many investors, such as Insurance fund, and social security fund. In recent years, China has been vigorously promoting economic restructuring and the security market has gradually becoming warmer. Mergers and acquisitions activities of listing corporations has become more frequent, the most typical case is pharmaceutical industry, which is the representative of the emerging industries. But the investor has a larger controversy on whether the high premium, the characteristics of pharmaceutical industry mergers and acquisitions, are reasonable or can bring value to investors.In this paper, we pick up and analyze the case that Company A which purchase company B with high premium. This case is the largest mergers and acquisitions case, typically present Chinese medicine manufacturing industry of the pharmaceutical in 2015. Investors has a strong controversy in B’s 360% high premium, which directly resulted in the drop of stock of company A, causing losses to many of them.This paper,based on the development of pharmaceutical industry, characteristics of mergers and acquisitions and the valuation of listed companies, combined with the merger premium theory and previous the Acquisition Premium research on influence factors, takes the case that enterprise B with high premium on the cause of formation as an example. In-depth study of the pharmaceutical industry M&A with high premium into reasons and influencing factors. And proposed some reasonable suggestions to evaluate the Chinese mergers and acquisitions in the pharmaceutical industry.First of all, this article found that the pharmaceutical industry has the characteristics of light industry and high technology content, most of the pharmaceutical companies of high value-added rate of source came to intangible assets value and the promising development of this industry and the goal company. As for the value of intangible assets, the existing appraiser does not have the professional ability to assess the intangible assets of Medicines; As for the estimation for future development of the company, the appraiser often has a strong subjectivity, will be affected by the market environment and the assessed company. In this case, after comparing with other corporations in same industry, the author found that the appraiser’s optimistic estimation to the business revenue growth and operating expenses of company B directly impact the high premium; Secondly with the M&A premium theory and the effort of previous research. It is found that the enterprise A mergers and acquisitions B is expected to be a good synergy effect, enterprise A to issue shares to buy assets to pay the way as well as the abnormal movements of the A business before the suspension can also be a good explanation of the reasons for the high premium of enterprise B. Thus, the high premium of enterprises B is the result of many aspects. In the last part of this paper, author believe the reason that mergers and acquisitions in the pharmaceutical industry for the high premium is first because the optimistic prospects for the development of this industry, and also the optimistic outlook of assessment for the company’s. In order to enhance the rationality of the pharmaceutical industry mergers and acquisitions premium, this paper puts forward the following suggestions:First of all, to improve the professional ability of the assessment division; Secondly, as for the current assessment situation, we can’t assessing only based on the asset-based approach and the income approach, but also introduced to the market method for a comprehensive comparison. Finally, regulators should strengthen information disclosure management, crack down on insider trading. So as to get a better assessment of the value of a fair and protect the interests of investors. |
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