Analysis of Cross-industry M&A in the New Energy Era: a Case Study of Dexin Transport

Abstract

Under the strategic vision of green economy and the goal of carbon peaking and carbon neutrality, China's new energy industry has entered a new stage of high-quality development. Meanwhile, the scale of M&A of Chinese enterprises began to increase rapidly after 2007 as more and more enterprises explore diversification strategy and seek business transformation. In this context, this paper explores the motivations and performance of enterprises' cross-industry merger in the new energy era by studying the case of Dexin Transport's cross-industry merger with Zhihong Precision which realized its transformation to the new energy industry. This paper analyzes the status of related companies, the prospection of related industries and the companies’ financial situation to explore the motivation of cross-industry mergers. We also evaluate the performance of the merger from the perspective of short-term market effect, status of transformation, long-term market performance and financial situation, and gives relevant investment suggestions. Based on the analysis, strategic transformation and cross-industry M&A are feasible choices for companies whose main businesses are limited in development and companies in financial distress. On the other hand, it is essential to be farsighted in the selection of the target industry. The development potential and market recognition of the target industry are the key to the improvement of the company's future performance and financial condition. These results present guiding significance for enterprises in similar circumstances and provides practical reference for enterprises with business transformation or upgrading plans and merger plans.