A Case Study Analysis Of BAONENG GTOUP Leveraged Buy-out Vanke

Leveraged buy-out bud in the United States,in the late 1970 s and early 1980 s.Its appearance has changed the history of M&A and triggered a global wave of M&A for the fourth time,which has taken corporate and capital market development to “high-speed channel”.With the coming of China’s economy new normal,deepening of the supply side reform and the upgrading of traditional industries,all kinds of ownership economy is more energetic and a new round of Chinese M&A tide is blustery.First of all,the paper search the related literature of theory and performance study of LBO,mainly including related theory,financing structure,acquiring the target enterprise value influence of related research,and the risks of LBO.Next,the paper state the specific process of the LBO,and in-depth analysis the case.The case focus on the target enterprise value evaluation,the source of the operation of funds,and buying behavior to both short-term and long-term effects of the target enterprise.When estimating the value of the Vanke,we use FCFF to calculate.In acquisitions on the short-term effects of target enterprise,we use the case study method analysis the stock market’s response.In the process of acquisition,BAONENG organized the banking,securities,insurance,trust and so on various funds,used multiple tools,such as the insurance accounts,brokerage asset management plan,limited partnership funds and institutional asset management plan.Although each layer leverage architecture is 1:2,by all kinds of financial leverage,finally achieved about 4.2 times of leverage,which cost 43 billion to buy 25% shares of Vanke.According to the empirical results,the stock market has made a positive response to raising announcement,acquisitions improves the Vanke shares and boosted its short-term impact.Then the paper analyzes the revelation about BAONENG achieved leveraged buy-out.Next we analyzed the dial may reflect the problems in the Chinese capital market and put forward related suggestions to solve these problems.Based on the analysis of the front the case,the last part of the article make a summary about the case and the present situation of China’s capital market.