A Case Study On The Economic Consequences Of Horizontal Mergers Of Internet Enterprices

In 2005,China's online video industry started.After that,it experienced rapid development and gradual stable stage,but the industry was still in fierce competition.In 2012,the youku.com and tudou.com were merged,who ranked the first and the second in the industry,and after several years of development,the research of youku.com and tudou.com could show the economic consequences of development since its merger after a number of years.In this paper,through the horizontal merger of Internet companies in recent years,it lead to the subject of the research,and then reviewed the current domestic and foreign research methods on the economic consequences of mergers and acquisitions.It also introduced the theory of horizontal merger among Internet enterprises,based on synergy.The research chose Youku Tudou Inc.as an example,and summarized its changes and impacts of the external environment and internal environment before and after the merger,providing the basis for the analysis of the economic consequences later.In the evaluation of the economic consequences of the merger of Youku Tudou Inc.,this paper selected two evaluation methods,respectively,the event method and index method.Firstly,in the short term,the research calculated the excess rate of return of tudou.com and youku.com,during the window period,by the event method.Then,this research analyzed the combination effect on the capital market performance with the window period of 4 days and 20 days.Secondly,in the long term,in view of the synergistic effect,this research analysed the performance of merger,from three angles,namely,operating synergy,management synergy and financial synergy to classify the financial indicators.In addition,taking the one-sided of financial indicators into account,this paper also combined non-financial indicators,such as market share,user activity,and the number of changes in staff,in order to fully display the combined effects of Youku Tudou Inc..In the study,it found that in the short term,Tudou.com got more benefit than Youku.com,but in the long run,the changes of Youku Tudou Inc.both good and bad.With the event study,it found that tudou.com benefit more from combination events than youku.com.After officially announced 20 days later,the cumulative excess return of youku.com had almost returned to zero,but tudou.com last longer.By the comparison of longitudinal financial index,it found that most of the indicators of management synergy and financial synergy after merger had a better change,the sales cost rate also improved,but the effect of operating synergies was vary poor.For non-financial index,market share and user activity were generally not good,so there was a certain gap with the expected effect.