An Analysis Of Horizontal Merger Synergy Effect

Merger is a complicated transaction.Mergers and acquisitions cost a lot in the process that starting from the planning,to the integrate of acquisition strategy,then to the selection and analysis of target companies.So if there is no scientific theoretical guidance,there will be no practical operation.It is difficult to achieve success in mergers and acquisitions.This is just the beginning of the merger and synergy when mergers and acquisitions act occurs.Something that is important is integration after the act.Merger does not produce efficiency,only if the tactics use properly and the acquired company integration well,it could enhance the companies' competitiveness,generating economies of scale.Thus,in the context of the current merger activity in full swing,it has a very important practical significance to conduct researches and analysis of synergies,to provide guidance for mergers and acquisitions activities.Baidu merger PPS was a major acquisition case in the Chinese online video market.Chinese online video market was originated from 2005,it had through a rapid development process.In May 2013,Baidu merger PPS promoted the merger wave of the entire industry.Baidu and PPS were both on the market as the top two video sites,the merger is an example of a powerful combination,and the synergies generated by the combination is bound to bring a new pattern for the network video market.In this paper,according to the characteristics of the Internet enterprise mergers and acquisitions,the author choose Baidu merger PPS as a case using the literature research and case data analysis.First of all,through the analysis and summary of related literature at home and abroad,I fully understand of the key theories of enterprise horizontal merger synergies,for dissertation research on mergers and acquisitions have synergistic effect and a good foundation for performance evaluation.Then the synergies of Baidu merger PPS has been described in details.Understanding of the main theory of mergers and acquisitions of horizontal merger synergies,which contained horizontal definition,motivation,the concept of synergy,synergistic effect of evaluation methods and strategies to realize synergies it lay the foundation for the study of horizontal merger synergies and its evaluation.Then,taking the actual merger case of Baidu and PPS as basis and combining with the Baidu and PPS's annual financial report data,I had Baidu merger PPS to undertake a comprehensive multi-angle analysis on typical cases which contained on operating synergy,financial synergy and management synergy.It was on both financial and non-financial points of view to sum up the experience and enlightenment of the relative acquisition.In terms of the structure of the article,the first part is the introduction for the next part of the theory of interpretation.It describes the background and significance,literature review,research ideas and methods of the paper,as well as the basic framework of the thesis.The second part of the paper describes that the theories have been used in the analysis of the merger case for parts of the case after the introduction and analysis to lay the theoretical foundation.It mainly describes the two theories that are horizontal mergers and synergies which includes the definition of horizontal mergers and acquisitions,the definition and classification of synergies,synergistic effect evaluation method and the basic strategy to realize the coordinated effect of horizontal mergers and acquisitions,and the theoretical basis of horizontal merge synergy effect analysis.In the third part,I analyze the pre-merger overview of the two company and the measures have been taken to achieve the synergies after the merger,giving a brief introduction for the case.In the fourth part,I combine the methods of financial indicators analysis and non-financial indicators analysis,analyzing the synergies after Baidu acquisition PPS.From the viewpoints of management,finance,management,it also analyzes Baidu and the synergistic effect of PPS after the merger.In the fifth part I summary the experience and revelation learn from the case of Baidu merger PPS to provide some useful inspirations for the similar enterprises in the same industry merger integration.