A Case Study On Mergers And Acquisitions Of 3F Co., LTD

With China's economy entering a new normal,loss and performance decline have become the urgent problems to be solved by many companies in traditional industries.At the same time,the Eighteenth National Congress of the Communist Party of China proposed that China should support the development of strategic emerging industries,and the cultural industry has increasingly attracted the attention of the capital market.With multiple benefits,Chinese cultural industry has entered a golden period of development,and there are many mergers and acquisitions of cultural industry.In this case,the listed company 3F was a traditional chemical manufacturing state-owned enterprise.Affected by the downturn of fluorine chemical industry in recent years,the company did not perform well and faced the warning of delisting risk.In this context,3F responded to the strategy of state-owned enterprise reform and merged and reorganized the enterprises related to cultural industry.This paper uses literature research,case study and event study to analyze the cross-border merger and acquisition of 3F.The main contents are as follows:Firstly,it elaborates the research background and significance,and reviews the related literature of M&A.Secondly,it is the case introduction part.Firstly,it analyses the industry background and policy supervision background when the case happened.Then it introduces the four subjects involved in the merger and acquisition transaction.Among them,it makes an analysis of the operation and finance of the research object,3F and the target enterprise,AVA.Then it introduces the process of M&A,including the introduction of transaction timeline,M&A steps and plans,and the combing and summary of the results of M&A.Thirdly,it is the case study part.Case analysis is divided into six parts.The first part is the analysis of the motives of the mergers and acquisitions.The second part is a detailed analysis of M&A schemes,including payment methods,betting agreements,evasion of backdoor identification criteria and the guarantee of the stability of control rights.The third part is the analysis of M&A consideration.There are three transaction consideration involved in this M&A.This paper evaluates and rationalizes the transaction consideration of purchase and sale of major assets,and evaluates the consideration of equity transfer and analyses the motivation of premium.The fourth part is the analysis of the synergistic effect of post-M&A integration and M&A.The fifth part is to analyze the goodwill impairment risk,integration risk and talent and technology risk in this M&A.The sixth part uses the event study method to analyze the short-term market performance of this M&A,and uses the financial index method to analyze the medium and long-term business performance.The last part is the case enlightenment.Based on the analysis of the whole M&A and reorganization event,this paper summarizes the key points that traditional chemical enterprises should pay attention to in cross-border M&A of emerging industry assets,and summarizes the key issues and solutions of the regulatory backdoor scheme through the approval of the Securities and Exchange Commission.Based on the case study of 3F's M&A and reorganization,this paper draws the following conclusions: Firstly,the design of gambling agreement can hedge the risk of impairment of goodwill in M&A.Secondly,we should pay attention to cash flow when designing transaction scheme.Thirdly,we should choose reasonable valuation methods in the process of M&A.Fourthly,we should clarify the direction of industry development in cross-border M&A.Fifth,In the design of M&A plan,we should pay attention to the regulatory purposes of the regulatory authorities,and not speculate.Sixthly,the market-oriented cross-border M&A of state-owned enterprises is conducive to the transformation and upgrading of economic structure,and the transformation of new and old momentum of economic development.This paper has some enlightenment on the scheme design and path selection of cross-border M&A and smooth transformation and upgrading of listed state-owned enterprises in traditional manufacturing industry,and has certain reference significance for other M&A and restructuring enterprises in consideration of the rationality of valuation of light assets enterprises such as cultural industry.