The Related Mergers And Acquisition Between Bairun And Bacchus:for Interest Synergistic Effect Or Tunneling Controlling

M&A is an important way to expand or adjust the strategies of company.In China,mergers and acquisitions not only occur in non-affiliated enterprises,but also in affiliated enterprises.Because of the special relationship between the two parties in related party M&A,more and more scholars have begun to pay attention to the real motives of M&A.On the one hand,it maybe optimize resources combination,decrease trading costs,restructure and adjust the scope and methods of business operations by related party M&A,realizing industrial transformation and bringing new profit growth points and improving profitability.On the other hand,related party M&A may become a tool of tunneling for large shareholders to transfer resources of companies.Thus,it infringes on the interests of small and medium shareholders.Whether large shareholders are to increase the wealth of all shareholders for the purpose of alignment of interests or to encroach on the interests of small shareholders for the purpose of tunneling in related party M&A,which has not been conclusively concluded in the academic circles.Therefore,this paper makes a case study of related party M&A of listed companies in China,in order to explore the real motivation of large shareholders in related party M&A.The study selects the case of the related party M&A between Bairun company and Bacchus for analysis.After introducing the basic situation of Bairun and Bacchus,the process and the transaction scheme of M&A,the case is analyzed in depth from the different motives of related party M&A.From the perspective of interest synergy,it analyses three causes of M&A in the transaction scheme,finding that there are unreasonable motives for diversification,enhancing sustained profitability and enhancing synergy effect.Then,this paper researches the bidder's short-term and long-term performance after the M&A.It finds that the expected synergy effect is not obvious in the long term,although the Bairun's shareholder gain wealth effect in the short term.From the perspective of tunneling controlling,this paper analyses the behavior of large shareholders selling Bacchus at a low price before M&A,purchasing Bacchus at a high price in M&A and distributing the unreasonable high dividend and managing earnings for improving performance and pledging equity to get cash after M&A.In addition,this paper also analyses the earnings of large shareholders in this transaction.Based on the analysis of the two perspectives above,the conclusion is drawn that the real motives of related party M&A between Bairun and Bacchus is not synergy of interests,but tunneling.Then,this paper further explores the reasons why the large shareholders of Bairun transfer interests through related M&A,and finds that the main reason is the defects of internal and external governance.Finally,the study gives advice to reduce similar incidents,so as to protect the benefit of minority stockholders.