Performance Research Of TCL’s Acquisition Of Zhonghuan Group Under Refocusing Strategy

Diversified development mode,so that many enterprises change with each passing day,have great progress.However,some problems brought by excessive development are also becoming more and more obvious.Some diversified enterprises begin to lose scale economy and competitive advantage.With the government’s call to return to core business,more and more enterprises have begun to revise their development track gradually through refocusing strategy.Refocusing means refocusing development on the core business and correcting excessive diversification.TCL Technology Group Corporation(hereinafter referred to as "TCL")began to implement its diversification strategy at the early stage of its establishment.The business scope of the enterprise has been expanded to achieve the development of transformation from nothing to something and from something to many,and the diversified tentacles are spread over a wide range of industrial fields such as home appliances,real estate and cell phones.In recent years,although TCL still continues to expand,the problems brought by excessive diversification have led to the limitation of the development of the enterprise.Therefore,TCL began to implement strategic reforms and explore a nucleation development strategy suitable for the new phase of TCL.In July 2020,TCL formally acquired Tianjin Zhonghuan Electronic Information Group Co.(hereinafter referred to as "Zhonghuan Group"),which realized the vertical extension of the upstream link of the industrial chain and strengthened and developed the core industry.In this paper,firstly,we use literature research method to review domestic and international literature and clarify the concepts of nucleation strategy,M&A and M&A performance.Secondly,we use the case study method to study the motivation and performance of TCL’s M&A of Zhonghuan Group,guided by the theory of nucleation,the theory of synergy effect and the theory of M&A performance.The M&A motives are analyzed in terms of strategic,synergistic and financial motives,and the M&A performance is evaluated in a comprehensive manner by using the event study method and combining financial and non-financial indicators.As a typical representative of TCL’s transition from diversification to nucleation,this paper hopes to enrich the research on nucleation strategy and M&A activities by studying the motivation and performance of TCL’s M&A of Zhonghuan Group,and to provide some reference value for the subsequent companies that intend to transition to nucleation.