Research On The Effect Of M&A With Private Placement

The private placement as one of the refinancing channels of capital market,since it’s implementation in 2006,more and more favored by capital market.Till now,it’s almost the only channel of equity refinancing in China’s capital market.The private placement has become the normal mode of capital operation of listed companies.Moreover,the private placement combine with capital operation form many aspects,such as,asset acquisition,earnings management and shareholder’s reduction and so on.And it’s has influence on stock market and financial performance to some extent.In this paper,we choose the leading company in entertainment industry Soncheng’s private placement as the object of study.Because of the particularity of Soncheng’s industry,it’s adopted a typical M&A oriented private placement model,the acquisition of the hottest Red Net Broadcast company-Beijing six rooms Technology Co.,Ltd.Therefore,it’s significant to study the effect of M&A private placement of Soncheng on the healthy development of the capital market.First of all,this paper analyzes the current situation and development trend of private placement from the perspective of the theory and literature review.Secondly,this paper focuses on the analysis of the case,and discusses the main contents,such as motivation,price,and object and performance commitment of Songcheng’s private placement.Thirdly,this paper analyzes the short-term market effects and financial benefits of Songcheng’s private placement.The event study method is adopted to construct a series of indicators,to analyze the excess returns of different window periods,and to use the comparative analysis method to discuss the financial effects.Finally,we draw some conclusions and suggestions.Through this research,we think that the event has a certain market effect,and has a certain degree of financial synergies,but in the reduction of major shareholders have a certain degree of arbitrage opportunities.Therefore,it’s proposed to standardize the pricing mechanism and the arbitrage of acquisition oriented private placement.