The Impact Of M&A Events In The Food And Beverage Industry On Company Valuations

The implementation of the comprehensive registration system means that the listing requirements of companies are relaxed,investment risks and stock selection are more difficult,and shareholders need to improve their investment capabilities and research level,among which corporate mergers and acquisitions,as a major event in the development process of listed companies,are very easy to affect stock prices and company valuation.As a traditional industry with a long development year,the food and beverage industry has the possibility of exploring the law of stock price fluctuation and is easily favored by shareholders,so this paper takes this industry as an example to study the impact of corporate M&A events on valuation multipliers,and further studies the impact of M&A events on company valuation when using three valuation models.This paper takes 175 M&A events of 41 companies in the food and beverage industry that meet the screening conditions as a research sample,uses 3,146 trading days from 2010 to 2022,a total of 115,646 panel data to construct a model,uses the backward regression method to study,based on agency motivation,hubris hypothesis and overconfidence theory,synthesizes the empirical results,and draws the following conclusions:(1)The food and beverage industry is more suitable for the use of the price-to-book ratio valuation method,especially when considering the impact of M&A events,it is more accurate to use the valuation model of company valuation =net assets × price-to-book ratio for valuation,and the commonly used price-to-earnings ratio valuation method is poorly fitted.(2)When the target company is the "transaction buyer",the acquisition event will reduce the price-to-book ratio PB during the short-term window of [-20,20],resulting in a decrease in the company’s valuation,and horizontal mergers and acquisitions do not increase the company’s valuation.Based on the price-to-book valuation model,the acquisition will reduce the company’s valuation by RMB642.5 million,and for every RMB100 million increase involved in the acquisition,the company’s valuation will decrease by RMB101.3million.(3)When the target company is the "transaction seller",the sale event will increase the price-to-book ratio PB during the short-term window,but will eventually lead to a decrease in the company’s valuation due to the decrease in net assets.Based on the price-to-book ratio valuation model,the sale will reduce the company’s valuation by RMB2,199.7 million,and for each additional RMB100 million involved in the sale,the company’s valuation will decrease by RMB335.6 million.(4)M&A events will still reduce the company’s valuation during the medium to long term window of three months before and after the announcement date,and horizontal acquisitions will also reduce the company’s valuation.In the medium to long term,the reduction in company valuation from M&A events has decreased compared to the short term.(5)In the event of an acquisition or sale of a state-owned enterprise and a foreign-owned enterprise,the valuation of the company will decrease.The valuation of private enterprises and other types of enterprises will increase when they are acquired and sold,and private enterprises are most likely to benefit from corporate M&A events.(6)In the event of an acquisition or sale of a large company,the valuation of the company decreases.When small and medium-sized enterprises acquire and sell events,the valuation of the company increases,and the small and medium-sized enterprises benefit more from the M&A event.(7)When mergers and acquisitions occur between enterprises in the eastern,central and western regions,the valuation of the company will decrease,and the central enterprises will shrink the most.(8)The valuation of the company decreased when both the acquisition and sale of the target company occurred,but the decrease was even greater during the epidemic,especially the reduction in the valuation of the company more than doubled during the sale event.All three valuation models can basically verify the above conclusions.