Study On The M&A Effect Of Baosteel And WISCO

Since 2005,China has promulgated a series of policy documents to encourage Chinese steel companies to conduct mergers and acquisitions,and the industry has been optimized and upgraded.In recent years,with the adjustment of economic structure,the problem of overcapacity in China’s steel industry has become prominent,and supply and demand have been seriously unbalanced.In 2015,the capacity utilization rate fell to 69.16%.In the “Opinions on the Steel Industry to Resolve Excess Capacity and Realize the Development of the Depletion” It is proposed that China should reduce the production capacity of crude steel by 1 to 150 million tons on the basis of the previous five years.In such a macro environment,the profitability of the steel industry continued to decline.In 2015,the number of steel companies in China’s steel industry reached 50.5%.As the first large-scale steel enterprise after the founding of China’s new China,WISCO’s operating income in 2015 decreased by 41.29% year-on-year,and the loss amount was about 7.5 billion.The merger of Baosteel and WISCO will help improve the competitiveness of China’s steel companies in the international steel market.This case analysis provides a reference for the optimization of China’s steel industry and the reform of state-owned enterprises.It provides a model for the merger and acquisition of small and medium-sized iron and steel enterprises,and supplements the theoretical research on mergers and acquisitions of state-owned enterprises.M&A has the risk of failure,and how the M&A effect is an important criterion for judging the success of M&A.Based on the research results at home and abroad,this paper combines the background of Baosteel’s merger and acquisition of WISCO with the background of Baosteel’s merger and acquisition of WISCO to identify the motives of mergers and acquisitions,and adopts the event research method and the financial indicator method respectively to produce a market value effect on merger of Baosteel and WISCO.And the synergy effect analysis and verification,and put forward the experience and enlightenment of this merger.By analyzing the merger effect of merger of Baosteel and WISCO,this paper finds that Baosteel’s merger and acquisition of WISCO has obvious market value effect.The market is generally optimistic about this merger,which brings high profits to enterprises.At the same time,M&A activities have produced financial synergies,business synergies and management synergies.The solvency of M&A has remained stable and showed a trend of growth.The tax-saving effect of M&A has begun to appear;Optimize the layout of production bases and improve production varieties.The business performance has grown steadily;resource sharing,management technology upgrades,and management efficiency have improved,and the company’s operations have entered a virtuous circle.