The Study On Real-option-games Theory About The Overseas Mergers Of Resource-based Enterprises

Energy is an important material basis for human survival and development. Rapideconomic development has led to an urgent demand for energy. The limited nature ofnon-renewable resources and the complexity of the market environment are pushing thecompetition for energy. In this case, the resource-based enterprises have to go abroad foroverseas acquisitions, participating in a new round of the global distribution of energy.From1990to2009, the overseas mergers of resource-based enterprises from the beginningto the climax in China. At the same time，there are many problems：Inappropriateacquisition time, the imprecise of acquisition cost, inaccurate estimates about thecompetitors.Resource-based mergers and acquisitions with a high risk of their investments：Longacquisition cycle time, pre-and post-merger costly and so on. Many mergers andacquisitions are associated with national strategies and resource contention. The process ofM&A require a higher information transfer between competitors. It shows oligopoly ofmarket competition. The decision about the overseas mergers of resource-based enterprisescontains a lot of uncertainty factors. Some of these factors from the outside, some fromwithin the enterprise. However, uncertainty caused difficulties for decision-making has alsobrought greater benefits, making the decision certain softness and elasticity. The decisionsabout M&A impact on the future development of enterprise from a number ofuncertainties. For this reason, it is important to use a scientific and rational decisionanalysis method.Defects in using the NPV method in merger decisions are obvious：the timing of theacquisition or the value is not accurate, not fully consider the uncertainty and so on. Thustraditional methods cannot be good as a basis for decision-making. The real options theoryconsider the value of options, it overcome some drawbacks of the NPV method. Thetheory is entering the stage of practical application, but it failed to consider the investmentstrategy among competitors. Therefore, it is expected to solve this problem by introducingcompetitors in the real option theory. Real-option-games theory using the thought of gameand the method of modeling to form a scientific decision on the basic of the value of theproject on the use of real option theory. The theory focus on project’s expected return andthe best investment opportunity.The companies which involved in overseas mergers are financial strength and state’sfinancial supported. It is more difficult to enter the exit the market，the oligopoly situationreflects more obviously. The characteristics of an oligopoly is that each vendor mustconsider competitors’ response to their actions，which same as game. The best applicationarea is oligopoly, what’s more, in an oligopoly, the most representative is duopoly. Such studies are consistent with the Real-option-games and both for simple theory and realisticrepresentation.Two models are built in this article on the basic of NPV method：The real optiondecision-making model and option game decision-making model. It establishes a duopolydecision model combines the characteristics of resource-based enterprises and overseasmergers under the condition of incomplete information. The model uses the method ofprobability, formula derivation and calculation to get the expected return，the best return,best opportunity and the relationship between them. So it can make the best decision bykeeping a balance among them. The assumption and building of the model are consistentwith the actual. It hoped to provide a useful reference for resource-based enterprises.