Study On The Risks,Strategies And Effects Of Technology-Acquiring Cross-Border M&A

For a long time,there is still a huge gap between the technology level of China’s manufacturing industry in key areas and that of developed countries,such as artificial intelligence and chips,which are monopolized by global giants,forming a "lock-in effect".As the international situation changes and the technological competition among countries intensifies,China has listed key technological breakthroughs and "innovation-driven" as the basic policy in "Made in China 2025",with industrial robots and other fields as important strategic graspers.Compared with independent research and development,cross-border M&A can acquire the core technology of advanced manufacturing industry in a short time,shorten the technological gap with developed countries and provide technical resources for independent research and development,so it is favored by many enterprises.In recent years,the motivation of cross-border M&A activities of China’s manufacturing enterprises has gradually shifted from traditional resource acquisition to technology acquisition,and the attention of fields such as semiconductor and intelligent manufacturing has been rising.However,it is worth noting that cross-border M&A involves complex economic activities,and the failure rate of cross-border M&A by Chinese companies remains high.Compared with cross-border M&As motivated by the acquisition of tangible resources,technology-acquisition cross-border M&As face a more serious situation in terms of valuation,security review,and integration,but there is little theoretical research on the risks of technology-acquisition cross-border M&As.Based on the contradiction between the advantages of cross-border M&A in technology catch-up and the risks of M&A,the risks and responses of technology-acquired cross-border M&A have become an urgent issue for both theoretical and practical circles.This paper adopts a case study approach,and the case study is the acquisition of KUKA by Midea Group.Midea Group carried out this M&A to acquire KUKA’s core industrial robotics and automation technologies to form synergy effects.This paper attempts to analyze this M&A of Midea Group in three aspects,namely,the risks of this technology-acquisition cross-border M&A,what strategies Midea Group adopted,and the performance of the M&A.The main conclusions of this paper are as follows:(1)The risks of this technology acquisition cross-border M&A of Midea Group mainly include financial risks,review risks,goodwill impairment risks and integration risks.(2)Risk response measures:(1)Financial risk: step-by-step M&A;hiring professional intermediaries;market comparison method for valuation;financing by own funds and syndicated borrowing.(2)Review risk: strengthen information communication and reputation building;sign the Investment Agreement to reflect the sincerity of the acquisition;promptly return the letter and strengthen information disclosure.(3)Goodwill impairment and integration risk: establish joint venture to develop robot business;technology synergy to enhance digitalization;increase R&D investment and pay attention to KUKA technology re-innovation;privatize KUKA Group and deepen local operation.(3)Risk response effect: Midea Group has a good market response in the long and short term after the M&A;in terms of non-financial performance,human capital efficiency has been optimized,innovation capacity has been continuously enhanced,digitalization has been increased,total factor productivity has been improved;in terms of financial performance,operating capacity has been improved,profitability has remained ahead,and debt servicing capacity has been affected,but still within a reasonable range.The main contributions of this paper are:(1)combining technology-acquisition cross-border M&A with risk for research,which enriches the relevant theoretical studies.The current literature related to technology acquisition cross-border M&A mainly focuses on the motivation,performance influencing factors,integration strategies,value creation,and innovation performance of technology M&A,with less attention to risks.(2)Selecting case studies on technology acquisition cross-border M&As can help analyze the risks,risk response and response effects of technology acquisition cross-border M&As from the perspective of the whole process,and then provide experiences for enterprises to implement technology acquisition cross-border M&As,as well as suggestions for government departments to formulate and improve cross-border M&A related policies.