Study On The Influencing Factors And Economic Consequences Of Oriental Seiko's High-Prime Merger Of Pride

Since the deregulation in 2014,listed companies have frequently increased their competitiveness through outbound mergers and acquisitions to achieve effective resource allocation.As M&A valuations continue to rise,this has led to frequent high-premium M&A.However,the success rate of high-premium mergers and acquisitions has continued to decline in recent years,which has seriously affected the performance of enterprises and the stability of the capital market.Therefore,in response to this phenomenon,this article uses the case of Oriental Seiko's acquisition of Pride as an example to analyze the influencing factors of high premium mergers and acquisitions and the economic consequences of high premium mergers and acquisitions.On this basis,this article explores and resolves the unreasonable parts of high-premium mergers and acquisitions,and provides advice for companies in this type of mergers and acquisitions in the futureFirst,this article reviews the relevant literature and basic theories of high-premium mergers and acquisitions.On this basis,this paper conducts a mechanism analysis of the influencing factors and economic consequences of the high premium,which provides basic support for the later case studies.Then,this article develops a case analysis based on the logic of "define premiums-analysis of influencing factors-analysis of economic consequences".Among them,in the "definition of premium" section,this article defines the merger as a high premium merger by comparing it with the industry average and historical average premium levels.In the "Influencing Factors Analysis" section,this article focuses on Oriental Seiko's M&A motivations,Oriental Seiko's overconfidence in management,Pride's light asset operation model,Pride's financial situation,synergy,M&A payment methods,valuation methods.These eight perspectives of performance commitment explain why Oriental Precision is willing to accept high premium considerations.In the "Economic Consequence Analysis" section,this article uses the event research method and the financial indicator method to analyze the short-term performance and long-term performance of Oriental Seiko after acquisition.Finally,conclusions and enlightenments are drawn based on the above analysis.The case study found that:Firstly,although the short-term performance of Oriental Precision has been greatly improved after the merger,the long-term performance has dropped significantly,indicating that this is a failed merger and acquisition case.Not only that,the difference between M&A premiums,M&A expectations and M&A performance is large,indicating that the premium this time is not reasonable.Second,the objective factor that led to the excessively high premium rate of the merger was that the book's net assets of the target company could not reflect its true value.In this regard,this article proposes the relevant parts:the government should improve the valuation of intangible assets and quantify the investment value of enterprises.Third,if the management of the acquirer is overconfident,the management will overestimate the returns and underestimate the risks,which will increase the extent of the merger premium.In this regard,relevant enterprises should incorporate the realization of post-performance into management's performance appraisal and strengthen the supervision and management of senior management.Fourth,high-premium mergers and acquisitions are accompanied by high expectations and high commitments.In this regard,relevant government departments should strengthen supervision of cases of "high premium+high performance commitments" and sort out clear accountability and punishment mechanisms for target companies that fail to achieve performance gambling.