Gree’s Merger And Acquisition Of Yinlong Case Study

This paper takes Gree Electric as an example to study the failed acquisition of Zhuhai Yinlong,briefly introduces the whole case and the design of the plan,and analyzes the logic behind the occurrence and evolution of the merger and acquisition event in detail.This article believes that the excessive concentration of main business risks and the slowdown in the growth rate of the air-conditioning industry are the fundamental driving factors for Gree to choose diversified development.Gree’s choice of the new energy automotive industry is a combination of its existing industrial chain advantages and the result of comprehensive consideration of the two aspects of the sunrise property of the new energy automobile industry.Gree Electric has a unique selection of the target in this merger and acquisition.From the operating level of the target company Zhuhai Yinlong,it has certain development potential and special advantages,but in terms of historical financial indicators and technological competitiveness in the future industry.In terms of certainty,there are also greater risks behind the merger.Further,this paper evaluates Gree’s valuation plan and finds that it is unreasonable.After selecting the market method for valuation calculations,it is found that Gree’s target pricing is more expensive than the calculation results of this article.There is suspicion of overestimation.Then,this article analyzes the design of the private placement plan,and performs valuation and sensitivity analysis on key elements.It is found that the design of the plan is beneficial to large shareholders,and there is a phenomenon that the private placement price is significantly lower.In the end,the plan was rejected by small and medium investors collectively and failed to pass the shareholders’ meeting.The main reason for the failure of this merger and acquisition needs to be considered from the perspective of small and medium investors.From the perspective of small and medium investors,Gree Electric’s move is difficult for investors with asymmetric information to discern the relationship between risk and return,the rationality of the underlying valuation is questionable,and it is obvious that the private placement pricing is low in the short term,which benefited the large shareholders but eroded the interests of small and medium shareholders.In the end,small and medium shareholders have collectively opposed the proposal under the mechanism that some large shareholders need to evade voting.The market response after the failed announcement also confirmed the attitude of small and medium shareholders from another angle.This paper believes that under the background of increasingly mature market mechanisms and stronger investor participation,companies need to comprehensively consider the interests of multiple parties and strengthen information disclosure when designing relevant merger and acquisition programs,and investors should also use public information to participate in figuring out the company and the logic behind decision-making.Last,investors are supposed to take a longer view and actively express their will on this basis to safeguard their own interests.