Lanzhou Meat Limited Liability Company Mergers,Acquisitions Planning,Control And Corporate Governance-Case Studies

Lanzhou city has launched393reform mode for State-owned enterprise since2004, creating unique Lanzhou Mode for SOE reform. Due to serious historical problems, Lanzhou Meat Processing Limited Liability Company generates huge losses, debts and arrears of wage for a long time. The creditors and employees ever went to provincial, municipal, district and governments at all level to petition, cause trouble and ask for money for several times. Because the Company is the only State-owned meat processing enterprise to be responsible for supplying meat products for more than3millions people in Lanzhou, the Lanzhou Municipal SASAC retain it as the non-staple food project of Lanzhou, and intend to sell all State-owned equity held by them. From June,2006to December,2007, the purchaser Sichuan Dasheng Industry Co., Ltd. and Mianyang Haoxin Industry Co., Ltd. cooperated to merge and purchase the Lanzhou Meat Processing Limited Liability Company.This case is characterized by, first, due to the existence of many plant-within-plant on the area of former Lanzhou Meat Processing Limited Liability Company, Sichuan Dasheng had to ask the Lanzhou Municipal SASAC to buy back all assets in the name of Lanzhou Meat Processing Limited Liability Company; second, during the purchase, Dasheng obtained much help from the government, in return, Dasheng helped the government to resolve lots of difficulties in State-owned enterprise reform for3years; third, it’s typical in that the private enterprise took part in purchase without knowing the complex interest imbroglio in the State-owned enterprise, as a result, the purchaser had to wrestle with the former executives in the following3years, the process of governing the whole company is also a process depriving the private interests of the executives.The second chapter of this paper makes a deep analysis for the case according to related theory, it’s more typical in that the private enterprise merged the State-owned enterprise. The important enlightenment is that, first, the private enterprise merged the State-owned enterprise to obtain a premium, then used it in the following governance to the whole company, so the value contributing to the private enterprise is little; the merging process and the company governing process must rely on the assistance and coordination from the local government, the government can help the enterprise to execute and protect its own property rights, and further resolve the unaccommodated problems from the employees in the processing of changing status; and third, the process of governing the State-owned enterprise after being merged by the private enterprise is a process executing property rights and control power, also a process of depriving the private interests of the former executives, it is a test for the private enterprise to govern the State-owned enterprise.