| In recent years,China has continued to promote the marketization reform of merger and reorganization,and actively supports all kinds of enterprises to develop through the capital market merger and reorganization.On the choice of payment methods,our country mostly adopts cash,stock and assets payment methods.With the continuous expansion of M&A scale,new payment tools are gradually appearing in M&A.In November 2018,the SEC actively promoted the use of targeted convertible bonds as a payment tool for M&A and restructuring transactions,but it is unclear what impact this new payment method will have on the financial performance of companies.Based on this,this paper selects Leike Defense,which has a high proportion of payment by directional convertible bonds,as the case study object.On the basis of analyzing the motivation,terms and effects of Leike Defense’s merger and acquisition,it adopts event study method,financial index method and entropy weight-TOPSIS method to analyze the financial performance of Leike Defense before and after the merger and acquisition,and compares it with the enterprise that adopts cash payment for mergers and acquisitions.The following conclusions are finally drawn:(1)The adoption of directional convertible bonds for M&A brings many benefits: Alleviate cash payment pressure and enhance sustainability;Delay equity dilution and retain control;Alleviate agency problems and balance the interests of all parties;Reduce information asymmetry and improve the success rate of M&A.At the same time,the payment method of directional convertible bonds plays a role in preventing risks,mainly in preventing integration risks and financial risks.(2)Based on the event study method,a comparative analysis is conducted between Leike Defense and Shenglu Telecommunication,which adopts the cash payment method.It can be found that investors are more optimistic about the payment method of directional convertible bonds,and show positive reactions.The excess return rate and cumulative excess return rate are both rising.The excess rate of return of Shenglu Telecommunication,which adopts the cash payment method,fluctuated within the normal range after the merger,but the accumulated excess rate of return decreased significantly,and the market reaction was not optimistic.(3)Based on the financial index method,the comparison between Leike Defense and Shenglu Telecommunication,which adopts cash payment method,shows that the financial performance after the merger with directional convertible bond payment method has improved in terms of debt repayment,profit,operation and growth ability.However,the financial performance after cash payment is not significantly improved in terms of debt paying ability,improved in terms of profitability,showed a downward trend in terms of operating ability,and decreased after a temporary improvement in terms of growth ability.(4)Based on entropy-Topsis method,12 listed companies that adopt directional convertible bonds for mergers and acquisitions are selected to rank their financial performance from 2017 to 2021.It can be found that the financial performance ranking of 12 listed companies that adopt directional convertible bonds for mergers and acquisitions is generally stable or increased after the mergers and acquisitions.The merger and acquisition under the payment mode of directional convertible bonds can improve the financial performance in the current ratio,asset growth rate,total asset turnover and other aspects.Although it may lead to a decline in the return on total assets in a short time,in the long run,it may have a positive effect on the overall improvement of financial performance.Based on the above analysis results,this paper proposes that: the acquirer should choose the appropriate payment method,strengthen the understanding of the acquired party,and flexibly set the terms of directional convertible bonds to reduce the risk;Regulators should encourage diversification of M&A payment instruments and establish and improve relevant laws and regulations. |
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