Research On Anti-Merger Strategies Under Ownership Dispersion

With the upgrading and transformation of Chinese economy and the advancement of the globalization process,the merger and acquisition activities among enterprises have become active since the first M&A case occurred in China in 1993.In 2005,the non-tradable share reform made the listed companies move towards the era of full circulation,and the company’s equity structure gradually changed from "one share alone" to "decentralized equity",which also led to a new dynamic in M&A.The decentralization of ownership structure provides the conditions for mergers and acquisitions.The capital market of our country frequently reports the news of listed companies being listed and hostile mergers and acquisitions.However,hostile mergers and acquisitions may not be conducive to the good development of enterprises.In case of hostile M&A,it is necessary to adopt appropriate anti-merger strategies to safeguard the interests of the company and shareholders.At present,many domestic listed companies still lack the awareness to resist hostile M&A,and the relevant laws and regulations are not perfect enough.As a result,there are not many anti-M&A activities in the domestic market,which in turn results in only a few anti-merger cases in the domestic market for reference.Therefore,the research on anti-merger strategies under decentralized ownership has certain practical significance and academic value.This paper uses literature research,case study,comparative study and event study methods to analyse the reasons for the success or failure of anti-merger by combining the theoretical foundations of principal-agent theory and control market theory with the antimerger strategies and effects of the management of listed companies,and hopes to explore the countermeasures of hostile M&A for companies with fragmented equity through the analysis of specific cases.Firstly,we analyse the current situation of anti-merger in listed companies in China,and find that listed companies with fragmented shareholdings are more likely to encounter hostile M&A and have a lower anti-merger win rate through the anti-merger situation of companies with different shareholding structures.Secondly,the anti-M&A cases of CSG Group against Qianhai Life and Yili Group against Sunshine Insurance are selected as double case studies to introduce the M&A parties and anti-M&A parties of the two cases,and to sort out the development process of hostile M&A and anti-M&A of CSG Group and Yili Group.In addition,the reasons for the different outcomes of the two listed companies are summarised,with an analysis of the motivation for the two listed companies to become M&A targets,and the reasons for the different outcomes of the two companies,with the loss of control in the case of CSG Group’s unsatisfactory anti-M&A strategies and the successful defence of control in the case of Yili Group’s anti-M&A strategies.Finally,the analysis of the reasons for the failure of the anti-merger strategy of CSG Group and the success of the antimerger strategy of Yili Group will provide insights and suggestions to the equity-diversified enterprises and regulators.The analysis of this paper finds that companies with fragmented shareholding structure and good operating conditions are easy targets for hostile M&A,companies lacking awareness of prevention are poorly able to resist hostile M&A and companies need to consider various aspects in formulating anti-merger strategies.In view of the reasons for the failure of the anti-merger strategy of CSG Group in comparison with Yili Group,namely weak awareness of M&A prevention,passive response of major shareholders,insufficient anti-M&A efforts,insider control problems and insufficient brand attention and influence,it is suggested that enterprises with fragmented equity structure should optimize their equity structure in terms of corporate governance and maintain good shareholder relations;strengthen market value management in terms of anti-merger and build an effective antimerger countermeasure system.