Study Of Financial Risk On The Case Of Chemchina Merger Pirelli

As an important strategic behavior of enterprises,cross-border M&A has become a new direction for Chinese enterprises to expand their scale and focus on international operations.Financial risk runs through the process of cross-border M&A.In order to successfully complete cross-border M&A,it is necessary to first identify,control and prevent risks.The research perspective of this paper is the analysis and control of financial risk of Chinese companies' cross-border M&A,combined with the case of China Chemicals' purchase of Pirelli tires,which aims to provide lessons for future cross-border M&A activities.In this study,the author used the financial risk theory of cross-border mergers and acquisitions,and consulted a large number of domestic and foreign research results,focusing on the specific case of China's chemical mergers and acquisitions of Pirelli tires.In this paper,the chronological order is the main line of logic,and the relevant financial data of the merger,acquisition,implementation and integration phases are screened.Through quantitative analysis,the financial risks faced by China Chemical in the whole process of M&A are summarized.The study found that the risk involved in the preparatory stage of M&A is mainly whether China Chemical has a clear acquisition strategy and whether it can objectively evaluate the target company.The financial risks during the implementation phase of the merger include: equity dilution may occur during financing,and payment is adopted.A large amount of cash may lead to risks and operational risks of corporate liquidity,exchange rate changes may affect the payment consideration,etc.;mergers and acquisitions are faced with institutional conflicts and complex resource restructuring.China Chemical adopted the following measures to avoid risks: a comprehensive evaluation of the merger,while financing design,rational planning of capital flow,control of internal costs to establish an integrated decision-making mechanism.Based on the successful experience of China's chemical mergers and acquisitions,this paper draws the following conclusions,For the financial risks arising from cross-border M&A activities,we can divide according to the preparatory phase,implementation phase,and integration phase and select targeted evasive means.China should pay more attention to the training of intermediaries and related talents.The integration after merger and acquisition is the key to success or failure.How to make the synergy effect of mergers and acquisitions quickly through integration is the most important issue in the current M&A process in China.The author hopes that through the combination of theory and practice,it will help Chinese enterprises to identify financial risks that may exist in cross-border mergers and acquisitions faster and more accurately,and improve their ability to prevent financial risks.