The Study of Operational Synergy Before and After the Merger of a Large Securities Firm By a Small Securities – A Case of the KGI Securities merging Taishin Securities based on Published information and analysis of internal expert interview.

• Main Authors: Chia-Long Chang, 張家榮
• Other Authors: Yang-Cheng Lu
• Format: Others
• Language: zh-TW
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/96819025143971304479

碩士 === 銘傳大學 === 財務金融學系碩士在職專班 === 99 === Since the year 2000, the Taiwan stock market has been in a bear market and adjustment period. Many small and medium sized brokerage businesses find it difficult to survive. Many of them start reducing or selling off branches or merge by large brokerage firm. Because of that, there have been mergers that are mostly small brokerage firms merged by large brokerage firm or Financial Holding Company. In recent years, the merger between large brokerage firms has not been successful partly because of the unfavorable condition of the brokerage industry which leads to big drop in profit and net worth. In those cases, M&A became very difficult because of the differences between the bid and offer by both parties. On May 14th, 2009, KGI Securities acquired Taishin Securities at a price of NT$29 Billions which also ignited the M&A of securities in the industry. The studied firm, Taishin Securities, faces difficulties in expanding its brokerage business and maintaining stability in its income. Taishin Financial Holding Company decided to sell its Taishin Securities with a net worth of NT$18 Billions to KGI Securities to better leverage its financial resource. KGI Securities has deep market penetration in large enterprise customers while Taishin Securities has deep market penetration in small and medium size enterprise customers. This case study discovered that the merger has a complimentary effect on the investment banking business. This is the first merger case where the merged company is larger than its acquirer. It is also the highest merger amount in the securities industry at the time. This paper uses case study and internal focus group in-depth interview methodology for analysis. The purpose is to discuss the synergy brought by the merger as KGI securities is expanding. This paper will reference studies regarding M&A and business synergy such as operation synergy, market synergy, and financial synergy. It will study the changes of those synergy indexes after the merger. The study shows that publicly open information does not provide enough data to explain the strategy decision behind this merger. Therefore, the result from the internal focus group in-depth interview provides valuable information on the in-depth strategy decision behind this merger.