Research On The Synergistic Effect Of China Resources Enterprise's Mergers And Acquisitions Of Tesco

Since China's reform and opening up,foreign investment continues increasing in our country.Foreign giants began to expand into China's retail market that hasn't been saturated,using globalization strategy including mergers and acquisitions,restructuring to carve up superior resources.Since 2012 China's retail industry entered a period of readjustment with its growth rate slowing down because of the development of electronic retailing and the influence of national policy.According to the disclosed data of CCFA,the M&A aggregate amount of the chain retail industries comes at the first place in 2013.However,some enterprises failed in the merger and acquisition activity.Through the investigation and analysis of some enterprises of M&A failures we found that these enterprises did not make effective assessment and analysis with both sides before mergers and acquisitions,while they generally don't realize the importance of synergistic effect.Obtaining synergistic effect is the key of implementation of merger and acquisition.The crucial purpose of M&A lies in whether there is a synergistic effect,the extent of synergistic effect decides the success of mergers and acquisitions.We take China Resources co.,LTD.(hereinafter referred to as the China Resources)acquiring Chinese businesses of British Tesco group co.,LTD.(hereinafter referred to as the Tesco)as a case,which is the largest Chinese and foreign retail merger project in 2013,since China Resources is top retail enterprises in China,and Tesco is the world's third largest retailer.Beneath the background of combining successively between the two strong enterprises,some problems appeared involving huge losses,long-term liabilities,the delay of internal integration.In this article we will analyze whether the merger generates the synergistic effect.At first,we summarize the related theories of merger,synergy and synergy analysis methods,which provide the theoretical foundation for later analysis.Second we analyze the case of China Resources acquiring Tesco,starting from the M&A motivation that Tesco had been expected to enhance the business and management synergy effect of China Resources.In this paper we use the method of case analysis,testing its operating synergy with the data quantitative analysis and value chain model respectively,examining management synergy with data analysis and Kutz model,to illustrate what problem appeared in the process of M&A.After all we use data test to analyze if there is a synergistic effect on the financial side.Based on the collation and analysis of the case,we summarize the article and conclude that China Resources did not realize operation and management synergies after M&A,as well as did not have a financial synergy,Finally we conclude that the key of mergers and acquisitions lies in identification and integration with the target company.