Motives And Economic Effects Of "Small Betting Big" Mergers In The Semiconductor Industry

In 2018,the country strongly supported the development of high-tech industries in companies,and the semiconductor industry,which has the highest technological content in the field of electronic information,has enormous development potential.The semiconductor industry’s growth has prompted many non-semiconductor firms to strive for collaboration with semiconductor companies in order to expand their reach and gain market dominance in recent times."Elephant swallowing" mergers and acquisitions have become an important option for enterprises.However,weak companies face enormous risks when attempting to acquire larger companies.Negligence can lead to failure.Despite the risks,many companies are still willing to take on the challenge,resulting in an increasing trend of "elephant swallowing" mergers and acquisitions.Consequently,it is imperative to scrutinize the motivations behind "elephant swallowing" mergers and acquisitions in the semiconductor sector,and analyze the applicable tactics employed during such transactions.Investigate the economic repercussions of such mergers and acquisitions on semiconductor firms post-merger.Weir Co.,Ltd.’s acquisition of Beijing Haowei is the most emblematic merger and acquisition case in recent years,and it is the one chosen for this article.As a downstream enterprise in the semiconductor industry,Weir Co.,Ltd.initiated a major merger and acquisition plan in 2018 in response to the government’s investment call for high-tech industries.Facing Beijing Haowei with an asset total close to five times its own,Weir Co.,Ltd.Employing successful acquisition tactics and employing a variety of payment techniques,the company was able to triumphantly conclude the acquisition,thus becoming a preeminent firm in the sector and officially entering the semiconductor arena.An elucidation of the research background,methods,and importance is provided in this article,followed by a categorization of pertinent literature.Subsequently,this article presents the pertinent theories of "elephant swallowing" mergers and acquisitions,as well as the theoretical foundation for them.Analysing the market environment of semiconductor companies,this paper also delineates the present advancement of the semiconductor sector.Weir Co.,Ltd.’s merger and acquisition process is presented in three stages: pre-acquisition,during,and post-acquisition,and its motivations for the merger are then examined.The capital market’s response to the merger and its performance subsequent to its completion are used to analyze the economic consequences of this transaction at last.Summarizing the pertinent deductions and inspirations,the article’s concluding section is presented.The analysis of this article concludes that: Firstly,although this acquisition was relatively successful overall,both financial and non-financial performance saw significant improvements in the short term after the completion of the acquisition.Secondly,choosing a suitable target company and developing a sound acquisition strategy are the keys to the success of "snake swallowing elephant" acquisitions.Thirdly,this acquisition brought significant long-term benefits to the company’s performance,but attention must be paid to the post-acquisition integration work and the avoidance of post-acquisition financing risks as much as possible.This article deeply combines the current situation of the domestic semiconductor industry with the successful case of Weir’s acquisition,and provides some guiding suggestions,in order to provide valuable references for relevant companies and greatly enhance their decision-making capabilities.