A Case Study of Bright Dairys Acquisition of Israels Tnuva Foods

Abstract

In recent years, with the development of Chinas economy and the policy encouragement of the Chinese government, more and more Chinese enterprises have participated in cross-border acquisitions and mergers and acquisitions. Studying the cases of cross-border mergers and acquisitions of large Chinese enterprises can help reveal the impact of similar mergers and acquisitions on the short-term stock price trend of enterprises and their financial indicators. This paper chooses Bright Dairy Foods acquisition of Tnuva as the main body of the case study. By constructing the FAMA-French Three-Factor Model, this paper studies the short-term effect the acquisition activity exerted on the stock price of Bright Diary Food. By studying the financial indicators, this paper studies the influence of M&A activities on the profitability and debt-paying ability of Bright Dairy Food. The research shows that Bright Dairys decision to acquire Tnuva aroused widespread concern from shareholders, and shareholders were optimistic about this decision, so the abnormal return of Bright Dairys stock has increased in the short term. In addition, the acquisition of Tnuva has improved the profitability of Bright Dairy but reduced its debt-paying ability.