The more successful precedents are in the context of management co-ordination

From the merger practice of Chinese Internet companies, the more successful precedents are in the context of management co-ordination, with most large companies buying unlisted small and medium-sized companies, as well as Youku and potatoes, both of which are listed as examples of "mergers, acquisitions".

There are few cases of hostility in China, and there are few successful precedents in the Internet arena.

Far can go back to the grand surprise attack on Sina, near the beginning of the month to see Baidu acquisition 360 rumors.

December 6, U.S. financial institutions JG Capital released a study, which said "Baidu November 21 through the issuance of bonds to finance 1.5 billion of dollars." We think they should use these funds to buy companies such as Qihoo, which has aroused much discussion in the IT industry.

The analysis reflects the agency's neither understanding of China's capital markets nor its understanding of Chinese Internet companies. Qihoo 360 and Baidu relationship for the Chinese industry share, it is hard to imagine Zhou will sell the company to Robin Li. and management does not cooperate with words, if Baidu really want to buy Qihoo, can only take "hostile acquisition" (hostile takeover) way, that is, to buy circulating shares at high prices, become a major shareholder control after the company, it is very difficult.

Technically, it is not a large amount of cash to complete the acquisition, the factors to consider also include the other company's shareholding structure, whether to set the "poison Pill" "golden parachute" and other anti-takeover provisions, whether the antitrust authorities will approve.

It's not easy to get together at the same opportune. In the case of Qihoo, which does not take into account antitrust approvals and anti-takeover clauses, its management holdings of more than 50% per cent (disclosed under a prospectus) are an insurmountable obstacle to hostile takeovers, unable to acquire enough tradable stocks to control the board and restructure management.

specifically to the Internet companies, and traditional industries are not the same, its core assets are "people", and "things" (such as land, mines, equipment and other fixed assets) is much lower. "People" is more likely to flow than "things", if the company is forcibly acquired by competitors, disgruntled employees and users are inevitably lost. The acquirer has been tossing about for a long time, the high price buys the thing to depreciate quickly.

In addition, there are some deeper reasons:

1, many Chinese companies including listed companies are "home world". All kinds of important resources appear to belong to the company, but are actually controlled by the founder or major shareholder personally. Hostile takeovers can only acquire assets on the books and cannot acquire the "relationships" needed to run them.

2, in the corporate acquisition, cultural integration has always been a big problem, and the "home world" of the company is particularly serious. It is impossible for the acquirer to install "airborne" in all important positions or to rely on the old staff. If these people do not have a sense of identity to the acquirer, it is hard for the company to operate healthily.

3, "New century" weekly editor Wang Shuo once commented that "hostile takeover case more market, the inevitable rule of law high", very insightful. Hostile takeovers need to be supported by a set of legal systems from company law to securities law, and Chinese law cannot say that there is no specification at all, but it is not clear that the cost to be borne by the acquirer is very uncertain. If two companies are listed on overseas exchanges, they may be better off, but they also face the risk of approval by domestic regulators.

4. Hostile takeovers are, to a large extent, the product of an emphasis on efficiency rather than a stable American culture, with few successful cases across Asia and often concentrated in resource companies.

From the merger practice of Chinese Internet companies, the more successful precedents are in the context of management co-ordination, with most large companies buying unlisted small and medium-sized companies, as well as Youku and potatoes, both of which are listed as examples of "mergers, acquisitions". Internet companies, even if they hold large sums of cash, are better off not having a head start and hostile takeover of rivals ' ideas.