| Summary: | 碩士 === 國立臺灣大學 === 財務金融學研究所 === 90 === Objective of this article is feasibility study for the two issues below:
1. Mergers and Acquisitions( M&A) as entry mode strategy for developing specialty chemical business in China;
2. Applying real options analysis( ROA) for M&A Valuation.
It’s quite possible that foreign direct investment (FDI) will be on hot pace for M&A in China and gradually induce FDI toward cross-border M&A. The key driving forces are the China open-door policy, it’s focus on inviting FDI and gradual liberation after China’s WTO accession.
The trend of cross-border M&A, historical survey of China M&A and its specific issues, Global and Chinese chemical industry development and characteristics of China industry are surveyed in depth. From these background surveys, it’s revealing that ongoing M&A tide in China behaves with all the features of the five Western M&A tides. This includes industrial restructuring, conglomeration, financial leverage and globalization.
From perspectives of the specialty chemical industry and business strategy, both the conception and feasibility for entering China through M&A are explored. Case study of a Taiwanese company for the two issues of objective is covered. The global strategy, strategic intent of M&A in China and strategic planning are elaborated in the study to assess the viability of issues proposed herein.
A successful M&A valuation should cover both the post-merger integration planning and synergy incurred. The benefit is ensuring right valuation and reveal future leverage for success prior to the deal done. Starting from post merger scenario, both the industry fragmentation and business strategy are elaborated to see its viability both strategically and economically for the case company and maybe similar industry.
Now therefore, considering the fragmentation and “Surplus economy” features of industries in China, together with the trend and implication from global M&A, it’s quite possible that M&A will be sustaining on even hotter paces in China. For specialty chemical industry incumbents, M&A as one of the options for China entry strategy is recommended. Benefit lies in rapid entry into the competitive market and acquiring a predatory position.
Further to all the points elaborated, the applicability of real options analysis for valuation is also tested. Especially for marginal conditions, ROA is valuable in deploying hidden values. Further research elaboration is proposed to validate agenda proposed herein and make it a value-creation business strategy.
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