Research On The Valuation Of China’s Oil Companies In Cross-Border M&A Based On The Case Of CNOOC Acquisition Of Canada Nexen

With the sixth wave of M&A since the beginning of the21st century, worldwidecross-border M&A activities are in full swing, the more widely involved in the business,enterprise scale growing and increasingly huge amount of transactions. Driven by worldM&A wave and strong economic development in China, China’s M&A market showsrapid growth trend, and M&A activity and transactions continue to record high. In thisone, the oil resources industry completed M&A activity is particularly prominent.Chinese oil companies M&A activities are in full swing, but the amount involved inthese M&A is less and these M&A have a lower success rate. With the M&A overallsuccess rate is only two percent, China’s oil enterprises "going out" on the road faces thepredicament. M&A success rate is so low, and M&A main reason for the failure is aninaccurate assessment of the value of the target company. In the whole process of M&Aactivity, the target company to determine the price has always been the core issue of theM&A decision. Only determine the price of a buyers and sellers can accept, these M&Aactivity can be completed. Therefore, the determination of the target enterprise price isthe basis of M&A activity. Thus, an accurate assessment of the target enterprise value isespecially important. Reasonable determination of the value of the target company, notonly to provide the basis of the price of a deal, and to promote the completion of theM&A activity, but also to avoid paying excessive acquisition premium, provided a goodstart for the complete success of the M&A activity.This paper is divided into five parts. The first part is an introduction, introduces theresearch background and significance, literature review, research ideas and methods, thisarticle innovations. The second part introduces the meaning of the value of the targetcompany and its manifestations and analyzes the cross-border M&A in the targetenterprise value assessment methods, including presentations and comparative analysisof the method of valuation of the target company, as well as M&A in the target enterprisevaluation method selection. The third part is to introduce cross-border M&A status ofChina’s oil companies, covering the introduction of diversification of the cause andmanner of cross-border M&A in China’s oil companies and the regional distribution of China’s oil companies cross-border M&A.The fourth part is the analysis of CNOOC acquisition of Canada Nexen, includingthe introduction of the M&A background, the analysis of the cause of CNOOCacquisition of Canada Nexen,the Nexen company valuation method selection and value,as well as the results of analysis. The fifth part is the conclusions of this study.All in all, this article by CNOOC acquisition of Canada Nexen typical case analysistells us how to choose the right method to value the reasonable valuation of the targetcompany in the cross-border M&A. Thus it contributes to the enterprise to make the rightdecisions in the process of cross-border M&A, in order to achieve the economic benefitsto the acquirer, and reference the correct valuation of cross-border M&A in the future ofChina’s oil companies.