Research On The Motivation And Performance Of Alibaba’s Merger And Acquisition Of Netease Kaola

With the rapid development of the Internet industry,the competition among Internet companies is becoming increasingly fierce.In order to achieve overtaking on curves in such a competitive situation,it is necessary to constantly develop their core competitiveness,improve market share and extend the industrial chain.Mergers and acquisitions have certainly provided a silver bullet for these Internet companies.Merger and acquisition activities are conducive to enhancing the competitiveness of enterprises and realizing diversified and sustainable development.Due to the different effects of different M&A drivers,M&A performance is still widely concerned by the theoretical and practical circles.China’s Internet industry is represented by three major giants:Baidu,Alibaba and Tencent.In recent years,under the influence of the Internet wave,a large number of e-commerce platform enterprises have emerged,and Internet enterprises have ushered in good development opportunities.Alibaba has always been at the forefront of mergers and acquisitions of Internet enterprises.This paper takes Alibaba Group as the research object and selects the event of Alibaba’s merger and acquisition of Netease Kaola.Firstly,it introduces the basic information of Alibaba and Netease Kaola,sorts out the background and process of this merger and acquisition,and analyzes the motivations of merger and acquisition from both internal and external aspects.Then,event study method and balanced scorecard are used respectively to evaluate the short-term and long-term M&A performance.The two methods complement each other,making the evaluation results scientific and reasonable.Finally,some suggestions are put forward to improve the performance of Internet mergers and acquisitions.The results show that:(1)Performance analysis based on event study method:the event of Alibaba’s merger and acquisition of Netease Kaola is generally a reflection of maintaining positive incentives,which has a positive effect on Alibaba’s short-term performance.(2)Performance analysis based on balanced scorecard:From the perspective of financial indicators,Alibaba’s debt paying ability is relatively good during the merger and acquisition period.Although Alibaba needs a large amount of cash support during the merger and integration period,its long-term debt paying ability is affected,but its debt paying ability is improved due to the smooth development of capital accumulation in the later period.From the perspective of operation ability,this merger activity for Alibaba’s operation ability to bring effect is not significant.From the perspective of development ability,the capital input of merger and acquisition integration leads to the increase of costs,resulting in Alibaba’s short-term development ability is insufficient.From the perspective of profitability,after the completion of the merger and acquisition transaction,the profitability accelerated in the short term,and showed a significant decline in the later period.With the stability of the domestic economic situation,Alibaba’s profitability may still return to the previous state.From the perspective of customer dimension,internal process,learning and growth dimension,the merger of Netease Kaola by Alibaba is a successful merger and acquisition activity in spite of the adverse impact of COVID-19 and other factors during the merger.(3)Based on the analysis results,the following suggestions are put forward for Internet enterprises:formulate scientific and reasonable M&A strategies,strengthen the integration of various aspects after M&A,and select appropriate combined payment methods.