The Research On Performance Of Huachangda-DMW Acquisition

In the recent years,contribute to the development of China economy,the realease of Capital controls and policy support of the government,the Chinese capital has played a more important role in the international stage,an increasing number of Chinese enterprises have conducted the Cross-border M&A which have become the important approach for internationalization and globalization of our local enterprises.This paper takes “Huachangda Intelligent Equipment Group Co.,Ltd acquiring Dearborn Mid West Conveyor Co.” as an example,having a research on its M&A performance and the factors which affect the performance.We also discuss the reference of the factors to the Cross-border M&A of Chinese enterprises.In November 2014,Huachangda Intelligent Equipment Group Co.,Ltd acquired entire equity of Dearborn Mid West Conveyor Co.at the price of fifty-two million five hundred thousand U.S.Dollars equivalent to three hundred and thirty million yuan.The main business of acquiring firm are intelligent automation equipment and system integration,similarly,the acquired firm is a sacle enterprise in continental U.S with main business of automotive intelligent equipment system integration,providing servieces to some industrial tycoons including Ford,Chrysler,GM and so on.According to the acquisition,the acquiring firm promoted the strategy of internationalization and impoved business and product line with extension,both side of the deal could share patent and market.This paper take “Huachangda Intelligent Equipment Group Co.,Ltd acquiring Dearborn Mid West Conveyor Co.” as an example,researching the purpose of acquisition,trading method,trading structure,pricing method,method of payment and intergration after acquisition.This paper summarizes the related theories of perfomance of M&A,using financial indicators analysis methods,through comparing indexs of profitbility,debt-paying ability,operating capacity and growth ability of the acquiring firm before and after the acquisition to analyse the M&A achievement.Event study also be used in this paper to analyse the shareholder wealth before and after the acquision.The financial risk is also be discussed in this paper and some rationalized suggestions have been given in order to improve the M&A performance.The result of the research shows that the Cross-border M&A has apparent positive effect on the long-term financial achievement of the acquiring firm Huachangda,which is reflected in the promotion of the financial indicators.Similarly,it has apparent positive effect on the short-term market achievement and shareholder wealth of the acquiring firm,which is reflected in the positive cumulative abnormal residual.This paper analyzes the reasons why the acquisition is successful,including the correct purpose of acquisition,the correct strategy of acquisition and the way of dealing with the process of acquisition and intergration.Some suggestions to Chinese enterprises are given in this paper to improve the M&A performance including the correct purpose and strategy of acquisition,avoiding overoptimism in the process,seeking for fairly valuation of the target and concerning the intergrattion.Some suggestions are also given to the Chinese government to support the Cross-border M&A of Chinese enterprises.