Research On The Financial Performance Of Yili’s Overseas Merger And Acquisition Of Westland,New Zealand

In recent years,under the "the Belt and Road" initiative,Chinese dairy enterprises have continuously strengthened international cooperation and exchanges,and Chinese dairy enterprises have more confidence in "bringing in" and "going out".On the one hand,the information,technology,talent,and market of the dairy industry are further integrating.While introducing cows and equipment,Chinese dairy enterprises have also introduced excellent talents and management concepts.On the other hand,relying on the "the Belt and Road" initiative,Chinese dairy enterprises actively cater to the policy orientation and rely on the form of building factories in countries along the "the Belt and Road" to strengthen the integration of resources between China and countries and regions along the "the Belt and Road",and enhance the international status and resource allocation capacity of China’s dairy industry.This article uses literature research and case analysis methods to study the financial performance of Yili’s overseas acquisition of Westland,New Zealand.Through a detailed analysis of the motivations,risks,and performance of Yili’s acquisition of Westland,New Zealand,it provides relevant experience and suggestions for overseas mergers and acquisitions in the food industry.Starting from synergy theory,market power theory,and efficiency theory,this article first analyzes the motivation of Yili’s overseas acquisition of Westland,New Zealand;Secondly,analyze the risks of Yili’s overseas acquisition of Westland,New Zealand;Finally,with regard to the financial performance analysis of Westland,New Zealand,which was acquired by Yili Overseas,this paper analyzes its M&A performance from a short-term and long-term perspective.Firstly,the event study method is used to analyze and evaluate the short-term performance of Yili’s acquisition through the performance of abnormal returns and cumulative abnormal returns.Then,the financial indicators research method and EVA research method are used to study the medium and long-term financial performance of Westland,New Zealand,which is an overseas acquisition of Yili.Through analysis,this article draws the following conclusions: The motivation for Yili’s acquisition of Westland,New Zealand,is reasonable and consistent with Yili’s development strategy of building a global "milk silk road".The brand Westland in New Zealand has a high reputation in New Zealand and is the second largest dairy cooperative in New Zealand.At the time of Yili’s acquisition,Westland in New Zealand was in a dilemma of huge debt and low purchase price of raw milk.Therefore,Yili’s selection of acquisition targets and timing is relatively appropriate;Yili has done a relatively complete due diligence on this merger and acquisition,with a reasonable valuation of the consideration.However,the choice of payment methods will reduce Yili’s operational and debt paying ability.In terms of M&A performance,the short-term M&A performance of this case is relatively significant;Due to the impact of COVID-19 on Yili Company,its M&A performance in the medium term was poor,but it was still in a leading position compared with other enterprises in the dairy industry in the same period;For long-term performance,in order to achieve the goal of long-term stable growth in performance,Yili must also fully integrate resources obtained through mergers and acquisitions to create synergies and achieve healthy and sustainable development.Based on a comprehensive analysis of Yili’s performance,it can be seen that this acquisition has initially achieved Yili’s preset acquisition goals,which is of high strategic significance for Yili’s overseas development.This article draws the following inspiration: When conducting merger and acquisition transactions,enterprises should scientifically and reasonably select merger and acquisition targets,and enterprises should choose merger and acquisition targets that conform to their strategic planning;After determining the target enterprise to be merged,a comprehensive investigation and understanding should be conducted to determine the appropriate acquisition price and payment method,and to minimize the financial pressure caused by the merger event.Finally,companies should pay close attention to the integration after mergers and acquisitions to maximize the synergies generated by the participation of the acquiree.