A Case Study Of Xinjinggang’s Directional Convertible Bond Merger And Acquisition

Mergers and acquisitions generally refer to the market behavior of absorbing and merging one or more companies by advantageous companies.It is an important means for the capital market to optimize resource allocation and achieve high-quality development.Before 2018,my country’s M&A payment methods were mainly cash payment and equity payment.However,with the development of the M&A market and the gradual improvement of the domestic capital market,the existing M&A payment methods were gradually unable to meet market requirements.In 2018,the China Securities Regulatory Commission issued relevant documents to clearly apply the directional convertible bond model to the M&A market,which greatly promoted the development of the domestic M&A market.Due to its flexible design and dual attributes of stocks and bonds,directional convertible bonds caused huge repercussions once they were launched.However,compared with the mature capital markets in the western world,directional convertible bonds are still in their infancy in my country,and the application of directional convertible bonds in mergers and acquisitions is still in the exploratory stage.At present,the domestic regulatory policies on the application of directional convertible bonds are not perfect,and enterprises have insufficient understanding of directional convertible bonds,such as the performance impact and potential risks brought about by the use of directional convertible bonds in mergers and acquisitions.At present,the domestic regulatory policies on the application of directional convertible bonds are not perfect,and enterprises have insufficient understanding of directional convertible bonds,such as the performance impact and potential risks brought about by the use of directional convertible bonds in mergers and acquisitions.At present,the research on the application of directional convertible bonds in mergers and acquisitions in domestic and foreign academic circles is mostly based on publicly offered convertible bonds.Analysis on the design of the terms of convertible bonds.However,there are few studies on the impact of directional convertible bonds on their own from the perspective of companies.In order to make up for the insufficiency of existing research,and to help regulators to improve relevant laws and regulations,and to select directional convertible bonds for other M&A companies The payment method provides a reference.This paper selects a specific case of corporate directional convertible bond mergers and acquisitions to analyze the motivation,performance and risk analysis of companies choosing directional convertible bond mergers and acquisitions.This thesis firstly discusses the motivation,performance and risk aspects of corporate directional convertible bond mergers and acquisitions,and then elaborates the definition of directional convertible bonds and mergers and acquisitions and related theoretical research based on the literature.By selecting the case of Xinjingang’s directional convertible bond merger and acquisition of Kuanpu Technology in 2019,the process and terms of its directional convertible bond merger and acquisition were first discussed,and then combined with corporate financial and stock price data,Xinjingang’s use of directional convertible bonds was further analyzed.The motivation,performance and risks of convertible bond mergers and acquisitions,supplemented by the data of similar directional convertible bond mergers and acquisitions companies,it is proposed that the company’s selection of directional convertible bonds can indeed bring positive performance impact to the company,but if the company does not pay attention to the company One-sided selection of directional convertible bonds or unreasonable arrangement of payment ratios will bring future risks to the company due to its own financial status,the proportion of controlling shareholders’ equity and the size of the target.Finally,based on the analysis,it is concluded that the acquirer should reasonably design the terms based on the financial status of both parties and the future development potential,so as to smooth the risk and further amplify the positive performance impact of the directional convertible bonds;the regulator also needs to be reasonable based on the financial status of both parties.Review the terms of corporate directional convertible bond mergers and acquisitions to maintain financial market stability;and the acquiree should carefully study the terms to ensure its own interests.