Research On The Motivation And Performance Of Kaishan’s Cross-border Merger And Acquisition Of Indonesian Geothermal Companies

With the development of economic globalization,the relationship between countries and economies has become close increasingly.Many enterprises have established the development goal of internationalization.The cross-border M&A has become an important way for enterprises to expand overseas.Successful cross-border M&A is beneficial for enterprises to enter the target market at a lower cost.It is beneficial to improve the market share of enterprises and enhance the market competitiveness of enterprises;It is conducive to the rational allocation of enterprise resources and the transformation and upgrading of industrial structure.However,there are some failure cases in the process of cross-border M&A.The analysis of successful cross-border M&A cases has certain researching significance.It can provide reference and advice for cross-border M&A behavior of Chinese enterprises in the future.In the research,I select Zhejiang complete compressor co.,LTD.(the)acquisition of Indonesia PT Sokoria geothermal company(SGI)as the case to study.By collecting the financial data and non-financial data of 2016-2020 of Zhejiang complete compressor co.,LTD as the foundation,I use the method which combine the theory analysis with the case analysis to analyze the merger systematically.First of all,combining the actual situation of the industry,I’ve analyzed the background and significance of cross-border merger and acquisition,summarized the relevant literature both home and abroad,and made a detailed introduction to synergy effect theory,multiplex management theory,resources dependency theory,enterprise growth theory from a theoretical perspective.Through the comprehensive analysis of these four theories,I summarize the theoretical basis which suits Chinese companies to achieve crossborder mergers and acquisitions.According to that,taking "the acquisition of Indonesia Geothermal Company by Kaishan" as an example,I analyze the the operating conditions of the two sides about motivations,processes,risks and characteristics of the acquisition.Besides,I compared and analyzed the performance of Kaishan before and after the cross-border acquisition of Indonesia Geothermal Company with financial index method,non-financial index method and EVA performance analysis method.Finally,in accordance with data analysis and combining the current situation of the industry development,I’ve drawn the conclusion and summarized the enlightenment of the cross-border merger and acquisition of Kaishan Shares.This paper finds that: first,the target of m&a is nearly achieved.Kaishan has avoided industrial barriers through cross-border mergers and acquisition successfully,and entered the field of geothermal power generation quickly,which has improved the industrial structure of the enterprise,broadened its sales network,and made the enterprise in an advantageous position in the market competition.Second,financial performance shows a positive growth trend.Vertical overseas M&A has extended the industrial chain of enterprises,opened up new market areas,enhanced the ability of enterprises to resist risks in market competition,and promoted the positive development of financial performance.Third,the industrial structure of enterprises has been optimized and the synergistic effect is significant.The overseas acquisition of Indonesia Geothermal Company opened up a new development area for the company and optimized its industrial structure.In addition,through the integration of resources after the merger,the coordination of supply chain and sales chain is completed,and the integration effect of 1+1 > 2is achieved.This study has got enlightenment: in the process of overseas M&A,we can consider the m&a between upstream and downstream industries,pay attention to the potential value of the target enterprise,choose the appropriate payment method,integrate resources well after m&a,and control the financial risks after M&A effectively.