Case Study Of Mergers And Acquisitions Performance Of Chinese Steel Industry Listed Companies

With the acceleration of economic globalization, mergers and acquisitions(M & A)has become important means of expending in size and enhancing the core competitiveness in multinational enterprises. M & A activities worldwide has become even more frequent, and more and more industries are swept into the tide of M & A, iron and steel industry without exception. The iron and steel industry has strong scale economies effects, but the industry concentration of Chinese iron and steel industry is low, and the enterprises is small. As a result, many companies have chosen to solve real contradiction through M & A with the purpose of improving the competitiveness.But confronting with the international background of the global financial crisis, imperfect economic system in domestic market, and irregular capital market, M & A activities is diverse and complex, and is influenced by all kinds of factors. Meanwhile, because of the weak-from efficiency of our capital market and research method problems, the scholars have focused on the research of M & A performance, but have not yet come to consistent conclusions. Therefore, in the form of case studies, the analysis of the current Chinese steel industry M & A performance of listed companies is of great practical significance.The purpose of this paperThe first purpose is to evaluate the M & A performance of the listed steel industry companies from the perspective of M & A scale effect. In this paper, it measures the scale effect and evaluate the efficiency of M & A through financial indicators. And by case study it analyses whether the M & A of iron and steel enterprises can improve the industrial concentration of the iron and steel industry.The second purpose is to evaluate the M & A performance of the listed steel industry companies from the perspective of M & A synergy effects. In this paper, it measures the synergy effects and evaluate the performance of M & A through EVA synergy evaluation. And it analyses whether the performance of enterprises can be improved in the case after M & A.The main contents of this paperThis paper is divided into seven chapters. The first chapter is an introduction. This chapter firstly introduces the background, and proposes the research purposes, that is, to assess the M & A performance from the perspective of the M & A scale effects and synergy effects. Then it illustrates the research ideas, adopting the case study, and finally puts up with the expected contribution of this article.The second chapter is the theoretical analysis. This chapter firstly defines the M & A performance, and advances that the M & A performance evaluation contains two sections:the efficiency evaluation and the performance evaluation. And the M & A efficiency evaluation is to measure the M & A synergy effects, meanwhile the M & A performance evaluation is to measure the M & A scale effects. Then it proposes three methods of M & A performance evaluation-stock change method, financial analysis, and EVA analysis. Last it discusses the M & A effects which is indirect and qualitative, and analyses the wealth effect and the market effect.The third chapter is the M & A current situation analysis of the listed companies in Chinese steel industry. This chapter firstly describes the M & A status of Chinese steel industry, but there are some problems, such as government too much government interference, capital market imperfections and the imperfect integration. These problems restricts the development of Chinese steel industry. Then it analyses the M & A factors of the listed steel companies which is based on the scale effects, synergy effects and government factors. Finally it makes a comprehensive review on the M & A performance at this stage. The M & A does not reflect the obvious synergy effects, and the operating results do not have a qualitative leap.The forth chapter is the case study of Baosteel merging Bayi Iron & Steel. This chapter describes an overview of Baosteel and Bayi Iron & Steel. Then it analyses the M & A case. This acquisition is of the "Capital plus resources" type. Baosteel exports the capital, technology, management experience, and Bayi Steel provides for the coal, iron ore and other resources. After the M & A, the total output of Baosteel rapidly increases, and the production of Bayi Iron & Steel also reaches a record high, reaching economies of scale. However, the results have not been significantly improved for Baosteel. And Bayi Iron and Steel in the operating results have been enhanced.The fifth chapter is the case study of Hebei Iron and Steel Group integrated. This chapter describes the circumstances leading to the establishment of Hebei Iron and Steel Group. This acquisition is under the administrative power to promote M & A, and large enterprises involved in integrating belong to the provincial enterprises. Using convertible consolidation by merger, all the assets of two companies, liabilities, equity and people are fully integrated into Tangsteel. The M & A has the significant scale effect, and will also accelerate the integration of iron and steel enterprises in North China. Finally, I find that the M & A performance is not satisfactory under the executive power, and the two sides have not been improved significantly.The sixth chapter is the case study of Mittal merging Valin Iron & Steel. This chapter describes the general situation of both Mittal Steel and Valin Iron & Steel. The M & A is by way of share transfer, Valin Group has transferred 36.673% stake to Mittal, and the equity transfer price is relatively lower. Both two sides are based on different motives. And there are some factors to hinder achieving synergy effects. Of course, the two sides have broad prospects for cooperation, and the M & A will help Valin Group to reduce costs, expand marketing channels and collaborate R & D of new technologies. Finally, I find that the achievement of Valin Iron & Steel's has been improved, and the mergers and acquisitions are successful.The seventh chapter is the conclusion and outlook. This chapter summarizes the case studies, proposes the future prospects of the steel industry M & A, and finally points out the limitations of this article.The main contribution of this paperFirstly, we can evaluate the M & A performance of listed enterprises from the scale effects and synergy effects in theory.Secondly, this paper proposes how to assess the M & A scale effect and synergy effect in practice.Thirdly, I find that the M & A now do not achieve the desired results through case studies. And both tow sides have not made substantial improvement.