The Financial Performance Study On Lear Corporation Merge & Acquire New Trend Group

Following with the economic globalization, the fast economic times and the modern information technology, cross-border mergers & acquisitions play the more and more important role in the international business. As an emerging economy, China naturally becomes a hot land for international-enterprise investments, especially for the increasing foreign mergers & acquisitions. China’s 12th and 13th Five-Year Plan explicitly proposed the core of national economic goal to promote economic restructuring and enhance industrial competitiveness. Thus, it becomes essential how to use foreign-capital mergers & acquisitions effectively to improve business performance, obtain global-leading technology, promote China’s industrial upgrading and change its economic development mode. The financial performance analysis on foreign-capital mergers & acquisitions is the way to measure the achievements of both parties’motivations, to understand and evaluate M&A effects, to promote the upgrading and the sustainable, healthy development of the related industries.This paper carries out a follow-up study on the financial M&A performance of its two phases, taking one foreign-owned enterprise (Lear) merged & acquired a China domestic private auto-parts enterprise (New Trend) as the study case, respectively using Financial Index System method, Wale Proportion Score correction method and DuPont analysis method, longitudinally comparing the auto industrial trends over the same period, and horizontally comparing the competitor’s (Kuangda Technology) business performance. The study results show that the financial performance of the first M&A phase improved significantly, and its second phase became stabilized along with the developing bottlenecks, but overall the financial performance is better than before. To different degrees, both parties have achieved their respective motivations such as occupying China’s auto-fabric market, saving transaction costs, triggering synergies, improving operational management, and breaking the funding bottleneck etc. However, the capital structure of the M&A enterprise (Rui’an Lear) is too conservative and the operational efficiency of assets needs to be increased during its second M&A phase. Based on this business case study, the improvement measures and suggestions have been raised correspondingly at the end of this paper. Hope to improve Rui’an Lear’s business performance while to provide lessons learned for the foreign M&A in our country.