Determinants of Premiums in M&A Megadeals: The Case of China in 2014-2023

In recent years, there has been a notable surge in the involvement of Chinese firms in mergers and acquisitions (M&A) activities, both domestically and internationally. However, despite this uptick, our understanding of Chinese M&A remains limited, primarily due to the predominant focus of prior research on M&A activities conducted by firms from developed countries over the past century. Current study investigates the determinants of premiums in mergers and acquisitions megadeals within the Chinese market from 2014 to 2023. The research question addressed is: "What factors determine premiums in M&A megadeals in the Chinese market?" Employing regression analysis, the study aims to analyze the M&A environment in China, identify its specific characteristics, and uncover the factors influencing premiums in megadeals. The findings reveal a positive relationship between the share of trading shares acquired and the M&A premium, suggesting that larger proportions of trading shares acquired tend to result in higher premiums. Additionally, financial multiples such as price-to-earnings (PE) ratios of the acquiring company are found to be associated with the share of M&A premium in Chinese deals. The article contributes to a deeper understanding of M&A transactions in the Chinese market by examining megadeals, a topic that has received less attention compared to the American market, and offers valuable insights for investors, policymakers, and practitioners involved in M&A activities in China. Keywords: mergers and acquisitions, megadeals, Chinese M&A, M&A efficiency.