Research On The Application Of Directed Convertible Bonds In M & A Transactions Of Listed Companies

In 2018,the Shanghai Composite Index dropped from 3314 points to 2493 points,a drop of 24%.Bad market conditions will make investors pessimistic about the future direction of the market,and will be more willing to accept cash or bonds that can obtain fixed income,rather than accepting share payment methods,which greatly increases the difficulty of fundraising,coupled with the policy side After one after another enthusiasm for cracking down,the amount of the M & A and restructuring market dropped sharply from 7.58 trillion in 2017 to 4.84 trillion,a drop of 36%.In the current market atmosphere,traditional payment instruments such as cash and shares have gradually failed to meet the gaming and risk control needs of both parties.The "CSRC's Pilot Directed Convertible Bonds M & A to Support the Development of Listed Companies" issued on November 1,2018 clearly stated that "proactively promote pilots that use directed convertible bonds as payment tools for M & A and restructuring transactions." Since then,the market has gradually appeared M & A and restructuring transactions with directional convertible bonds as trading instruments.According to statistics,so far,more than 30 A-share listed companies have adopted targeted convertible bonds as a payment tool for M & A and restructuring in the M & A and restructuring programs.Among them,Sateng issued a plan on November 9 The first case in which debt is the main payment method for the merger of Lingou Technology is the first case,which indicates that directional convertible bonds have officially entered the practical stage from the concept stage.By reviewing the existing research on convertible bonds at home and abroad,it is known that foreign studies in this area are relatively mature and a systematic research system has gradually formed.However,due to the different market environments at home and abroad,we cannot directly apply its research results.At the same time,China's current research on convertible bonds is still very small,of which there are few case studies.Moreover,most of our research on convertible bonds is for publicly issued convertible bonds,and there is very little research on targeted convertible bonds.With the piloting of convertible bonds in China,related research should also be advanced simultaneously.Therefore,this article will use the case analysis method to analyze the advantages and risks of directional convertible bonds for corporate mergers and acquisitions,and get some inspiration from the design of listed companies' mergers and acquisitions payment methods.The study found that directional convertible bonds guarantee the basic demands of both parties through its flexible clause design,thereby improving the success rate of mergers and acquisitions in a weak market environment.At the same time,due to the uncertainty of stock price trends and related laws and regulations,Directed convertible bonds may also bring risks such as conversion failures,equity dilution,and even M & A failures.It is also because there are currently no laws and regulations and implementation details for targeted convertible bonds.It is particularly important to conduct research on targeted convertible bonds through case analysis.Analysis and exploration of the content in this regard can promote more scientific and comprehensive domestic related theories on the one hand,and can provide broader ideas for the design of payment methods for subsequent corporate mergers and acquisitions.