Case studies of seeking the motives of merger and acquisition between enterprises by using efficiency theory

Abstract

Horizontal merger refers to mergers and acquisitions (later same as M & A) between enterprises which belong to an industry, producing and operating same or similar products. The main purpose of the M & A is expanding its market share, generating economies of scale. In this paper, from a new perspective, the event study method was used to study the motivation of M & A enterprises through the case of Midea Electric Appliances acquisitions Little Swan. Verify merger motives of the Midea electrical appliance and Little Swan accord with efficiency theory. Through analyze three common effects of the efficiency theory (management synergies, operating synergies and financial synergies), further explain the application of efficiency theory in the horizontal merger and acquisition motives between enterprises, and eventually come to convincing conclusions.