Research On The Motivation And Performance Ofstate-owned Iron And Steel Enterprises’ Mergerand Acquisition

Iron and steel industry is not only the basic industry supporting the development of national economy and industrialization,but also a typical resource intensive industry.China’s steel output and demand have remained the first in the world for many years,but there are still some problems remain in the steel industry,such as overcapacity,insufficient industrial concentration and serious product homogenization.Mergers and acquisitions among enterprises are conducive to optimizing resource allocation,eliminating surplus production capacity and improving industrial concentration.Several mergers and acquisitions among large scale steel enterprises have accomplished under the support from Chinese government in recent years.For instance,Baoteel and WISCO merged and formed China Baowu Iron and Steel Group,the largest one in China.Baowu Group took the step of merger and acquisition for the first time after three years,and regarded Masteel as the new target.The purpose of this paper is to compare and analyze the performance of Baowu group and Masteel before and after the M&A,and to reveal whether the M&A brings synergy for both sides and its influence on both financial and nonfinancial performance.This paper adopts literature research method,case analysis method as the main research methods.This paper chose Baosteel(600019.SH),the core company of Baowu,and Masteel(600808,SH)as research cases.In detail,the financial index analysis method and economic value-added method are used to analyze the financial performance of both sides of M&A in the process of case analysis.Meanwhile,the paper focused on the non-financial performance from three aspects: research and innovation ability;outcomes of environmental protection meatures and corporate governance.Through the above research,this paper draws the following conclusions: in terms of financial performance,the effect of M & A on the financial indicators of Baosteel is not obvious,and the EVA is relatively stable after M & A;Masteel has improved its operation ability and development ability after M & A,but it does not significantly promote its solvency and profitability,and its EVA shows an upward trend after M & A.In terms of non-financial performance,Baosteel’s R & D and innovation ability has always maintained a leading position in the domestic iron and steel industry,the investment in environmental protection has increased year by year,and the results of environmental protection have initially appeared;The international market position has been improved and the product structure has been optimized.With the development platform provided by Baowu,Masteel has significantly improved the number and quality of patent applications,improved the R & D and innovation ability,and gradually made up for the shortcomings in environmental protection.The energy consumption index has reached the best level in history in 2020;The ability of corporate governance has been further improved and the governance model has been modernized.