A Case Study Of The Acquisitionion Of Huiyuan Communication By Huiyin Group

After the global economy experienced the subprime mortgage crisis in 2008,it has also taken steps to recover in recent years.Over time,the pace of global economic recovery has also entered a phase of slowdown.The mergers and acquisitions of major companies in the global capital market are in full swing.According to statistics,the amount of M&A in the capital market in China alone reached 4 trillion yuan in 2015,and it is expected that in the next 20 years,the cumulative total amount can exceed one trillion yuan.According to the statistical data of the Wind China M&A database,since 2011,China's M&A transaction market has been showing a growing trend.Especially since 2014,the number of M&A deals has grown explosively,and the transaction scale has greatly increased.In terms of mergers and acquisitions and the use of funds,there has been a clear trend in leveraged buyouts,and the use of capital markets has become apparent.In terms of mergers and acquisitions,the acquisition of high-leverage mergers and acquisitions from 2015 to 2016 is a clear trend,and the proportion of financing has risen rapidly.Compared with the developed and mature European and American capital markets,the capital market in mainland China is still very young.Leveraged buyouts,commonplace in the European and American markets,are still rare events in China and have shown new features in the new era.On November 20,2015,Huifu Qiji,a member of the Department of Huiyin Group,spent a total of 600 million yuan to transfer 20.68% of the shares of the listed company from the original controlling shareholder Mingjun Group of Huiyuan Communications and successfully became the controlling shareholder of Huiyuan Communications.Unexpectedly,the Huiyin Group has repeatedly suffered setbacks in the process of reorganization of assets after it entered the Huiyuan Communications.Its plan has been rejected by the shareholders' meeting several times,and has made no achievements in as many as two years.During this period,financial supervision has been upgraded and financial de-levering has been accelerating.The supervision and control of the assets restructuring by the CSRC has been continuously strengthened.To make things worse,the internal disputes have also occurred in Huifu Qiji.The B-level client of the asset management plan requested the replacement of the executive partner due to his dissatisfaction with the progress of the reorganization.In the few cases of leveraged buyouts in China in the past,the focus of the incident was often concentrated on the leveraged buyout process,that is,competition for equity and complex financing structures.The case of Huiyuan Communications this time showed different characteristics from the past.The acquirer successfully completed the acquisition and obtained the support of the board of directors.However,it still failed to complete the original plan and eventually regretted that it had withdrawn.This study is to use this event as an example to study the incentives of the acquirer at the beginning of a leveraged buyout,as well as the risks faced by the acquirer in gaining control of the company after asset acquisition and corporate governance,and analyzing the unreasonable leveraged financing structure.Risks and propose countermeasures to provide lessons for similar actions in the future.This paper intends to use the literature survey method and case study method to carry out research on this topic.Based on the theory of reading leveraged buyouts,the writer reviewed the typical cases of leveraged buyouts occurring at home and abroad,and conducted comparative analysis with the case studies of the Huiyin Group of Buying Huiyuan Communications,and finally summed up the research results.This article believes that the leveraged buyout of Huiyuan Communication led by the Huiyin Group,although relatively smooth in the acquisition of the controlling stake in the previous period,has not protected the small and medium investors due to its subsequent asset reorganization plan.At the general meeting of shareholders was rejected;and its behavior is deliberately circumventing the suspicion of a major asset restructuring constitutes a backdoor listing conditions,drawing the attention of the Shenzhen Stock Exchange;during the reorganization of its assets,the regulatory policy changes in the direction of the wind,by encouraging mergers and acquisitions to "go "Leverage" and strict regulatory change.The above factors have led to the failure of the Huiyin's asset restructuring plan.In this unfavorable market environment,the unreasonable leveraged financing structure of the Huiyin Group has caused the purchaser to break out of the conflict on the risk-benefit issue and brought about instability in control.Eventually,the purchaser revoked its intentions,and the LBO activity won and lost.Based on this,the paper proposes: to broaden the financing channels;to promote the registration system to eliminate leveraged buyouts;to protect the interests of small and medium shareholders;to reduce leveraged financing risks and other proposals.It is hoped that this can help the leveraged buyouts in the future A-share market.