M&As are developing really fast in China, especially in pharmaceutical industry. But the road of M&A is not flat, some enterprises suffered bitter and unnecessary losses because of blind M&A and lack of comprehensive understanding of the target company. Shanghai Pharmaceutical Co., Ltd. (Shanghai Pharma) played an exemplary role for improving industrial concentration, optimizing the organizational structure and rationally allocating resources by means of M&As. Event study methodology is used in this paper to test the effect of the merger case on the stock price of Shanghai Pharmaceutical Co., Ltd. The announcement of tender offer for the merger between Shanghai Pharma and Shanghai Industrial Pharmaceutical Investment Co. Ltd. (SIPI)/Shanghai Zhong Xi Pharmaceutical Co. Ltd. (SZXP) had a positive influence on the stock price at a statistical significant level, therefore it brought short term benefits for Shanghai Pharma. Financial analysis revealed the operating and financial synergies generated by this merger, we can find a substantial increase of three growth indicators: The main business's increasing rate of revenues, Net profit growth rate and Net asset growth rate, which means a great improvement of the enterprise operating capabilities. The company’s profitability and capital utilization improved a lot as we revealed after calculating ROS, ROA and ROE from 2006 to 2012. Shanghai Pharma also improved its capital structure and solvency through such large M&As. Forecasting synergies for this case, Shanghai Pharma and SIPI occupied the most part of synergies during this acquisition, however the increase in the enterprise value of SZXP was not significant.