A Study On The Financial Risk Of Huawei Pharmaceutical's Cross-industry Merger And Acquisition By Baihuacun

Along with the process of economic globalization and the rapid changes in China's economic environment,the number of M?A activities in China's capital market has increased year by year,and M?A has become an important means for many domestic enterprises to rapidly broaden their development.With the implementation of supply-side reform policies and some other policies,a large number of new economic forms have emerged,causing a considerable impact on traditional industries.Many companies in traditional industries have executed strategies to change industries in order to maintain growth,and conglomerate acquisition can help companies reduce barriers to entry into new areas and achieve diversification.Therefore,more and more companies are beginning to focus on the fields of medicine,computers,new energy,etc.These industries are developing rapidly and also have a high investment risk.M?A is a complex and risky investment activity that not only changes the control of a company,but also involves the conversion and integration of immaterial forms such as business strategies,financial systems,corporate culture,human resources,and corporate values.For companies that choose to transform themselves through conglomerate acquisition,entering unfamiliar industries and operating in new ones can be a huge challenge.If a company does not have a perfect plan in place to reduce or eliminate risks before implementing an M?A strategy,it is likely that the company will not be able to successfully complete the M?A and may even be in financial crisis.BHC was listed as a restaurant company in 1996,the first listed company in Xinjiang.It has made several conglomerate acquisitions.After changing its main business to coal mining and coal chemical industry in 2010,BHC operated at a loss for many years,and its shares were subject to "delisting risk warning".BHC spent 1.9billion to acquire HW in 2016 in order to retain its status as a listed company,hoping to enter the CRO industry through conglomerate acquisition,but the results of the conglomerate acquisition did not meet expectations and the company faced the risk of delisting again.This paper mainly adopts the case study method and document research method to study the financial risks in the process of conglomerate acquisition of BHC Company.Firstly,the paper provides a detailed analysis of BHC's conglomerate acquisition process and motivation.Secondly,the paper provides a qualitative analysis of the risks faced by BHC in the process of conglomerate acquisition from four aspects:pricing risk,financing risk,payment risk and integration risk.Thirdly,the paper used the entropy TOPSIS method to evaluate the financial situation of BHC after the implementation of the conglomerate acquisition,the conclusion is that BHC had low financial security due to the lack of risk management plan during the process of conglomerate acquisition.Finally,the paper makes relevant suggestions for other companies proposing to execute conglomerate acquisitions in terms of preventing financial risks.