Research on the Performance of Zhongding Group's Acquisition of German AMK Under Strategic Transformation Objectives

Ziye Li

doi:10.71222/vz3r8252

Authors

Ziye Li China University of Geosciences, Beijing, 100083, China Author

DOI:

https://doi.org/10.71222/vz3r8252

Keywords:

vertical mergers and acquisitions, financial indicators, merger and acquisition performance

Abstract

People's demand for cars has been increasing in recent years, in response to the country's call to save non-renewable resources. The sustainable development goals promote the rapid development of the new energy automobile industry, which provides new opportunities for the auto parts industry. Chinese parts and components enterprises have insufficient competitiveness in the high-end product market, high labour costs in the low-end product market, weak strength and insufficient research and development capabilities, so to take a place in the competition of different product markets and gain a larger market share, mergers and acquisitions (M&A) are an important way to learn about advanced productivity, market competitiveness and brand advantages. In this context, we evaluate the performance of the strategic behaviours of Zhongding's M&A of AMK in Germany, hoping that it can provide overseas M&A experience for domestic companies in the same industry. In this paper, we take the M&A of AMK as the research object, collate relevant literature at home and abroad, analyse the development trend of China's auto parts on the basis of the actual situation of both parties to the merger and acquisition, briefly analyse the motivation of the merger and acquisition and the process of the merger and acquisition, and combine the company's part of the financial indicators before and after the merger and acquisition, and use the method of financial and non-financial indicators to carry out a comprehensive analysis of the performance of M&A. Finally, the study concludes that the M&A has enlarged the operation scale of Zhongding, which has given the company a new growth point in revenue and further promoted the company's concept of diversified operation. However, the company's profitability did not reach the expected improvement, and the operating income and gross profit margin of air suspension system continued to decline. Due to the high production cost of air suspension system, it is unable to enter the low-end market and its service life is not long, which leads to the unstable development ability of the company. In this regard, it is proposed to reduce the production cost, popularise the middle and low-end automobile market, and prolong the service life, so as to enable the company to develop in a sustainable manner. It is a reference for other enterprises in the industry to carry out M&A.

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