| The listed company's merger and acquisition has become more and more widespread in the evolving share market.Many listed companies grow to be bigger and larger through M&A in a short period of time.In recent years,according to Wind database,industrial mergers and acquisitions dominate the mainstream of the M&A market. However, based on the diversified management and back-door-listing,the cross-industrial M&A activity are increasing.In the larger numbers of the cross-industrial M&A,merger by absorption is newhighlight in the share market.Two companies with different industrial background have realized transformation of main business and achieved strategic transition in the way of merger by absorption.The Study on merger by absorption cases in the two different time span of short-term and long-term have significant importance. It can provide realistic basis for listed companies whether make similar deals in the future. At the same time, it provides a scientific method for the manager to evaluate the short-term and long-term performance of the company after the merger by absorption, and to guide their decision about operation of company.In this paper, we take WZM merged with MeiHua group as an example.The WZM is a company which is the supplier of electrical equipment,while the MeiHua group is a company which specializes in biology.Firstly, we use the event study method to discuss the influence of merger by absorption on the short-term performance. Establishing the regression equation to fit the expected profit function,we obtain the expected rate of return.To compare the the difference of the expected return and actual return in the window phase, that is the abnormal rate of return, we calculate the value of cumulative abnormal return and get the conclusion about the evaluation of short-term performance. Secondly, we use factor analysis to study the effect of merger by absorption on the long-term performance. Though selecting 12 typical indicators from four aspects of financial income?assets operation?solvency and development ability,we use them to accomplish the Bartlett test of Sphericity and KMO.After satisfying the hypothesis of factor analysis, four common factors are extracted in the means of dimensionality reduction and these four common factors are renamed at the same time.Thses four different types of perspective can be used to evaluate the listed company's long-term performance. After giving a certain weight to the four common factors, the comprehensive score function of long-term performance is constructed, and the comprehensive performance scores of each year before and after M&A are calculated respectively. Finally, through the analysis of the above, we conclude the case of the short-term and long-term performanceandput forward some suggestions fortransaction of cross-industrial merger by absorption.The empirical results show that:first, the merger by absorption can create value. Whether in the short term or in the long term, the company's performance can achieve a certain degree of improvement. Second, in the short term, mergers and acquisitions which enhance the wealth of shareholders is much more significant. Company's share price in the window phase was an explosive rise, achieved 54.93% of the cumulative abnormal rate of return. Third, in the long term, M&A event on the enhance of shareholders'wealth is general, the comprehensive score function increase first,then decline sharply and smooth to the zero axis ultimately.This proves that the cross-industrial merger's market performance has been fully improved, but financial performance is poor.The innovation of this paper focus on the cross-industrial mergers and acquisitions which influence company's performance in the short and long term. Through this uncommon empirical merger analysis, it is obtained the research results.These results enrich the perspective of research on M&A performance and provide the reference for the similar M&A research or the real M&A transactions in the capital market. |
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