Baosteel’s Shareholding Merger And Acquisition Of WISCO Case Study

At present,China’s steel industry has a serious overcapacity,and the contradiction between market supply and demand has become increasingly prominent.The state is vigorously promoting structural reforms on the supply side and actively promoting the “de-capacity” of the steel industry.Although the supply-side structural reforms continued to deepen the “de-capacity” of the steel industry in 2019,the steel industry organization was dispersed,seriously affecting the effect of resolving the excess capacity policy.In recent years,the country has changed from total capacity to structural capacity,with the aim of actively promoting mergers and acquisitions in the steel industry to achieve resource integration and increase the concentration of the steel industry to enhance international competitiveness.However,traditional cash mergers and acquisitions have many problems.Therefore,exploring the steel industry mergers and acquisitions is of great significance to solve the problem of scattered organization and overcapacity.The paper takes Baosteel Co.,Ltd.for the acquisition of WISCO as a research object,and combines the literature research method with the case study method to study the M&A payment method,the share conversion ratio,and the cash option of dissident shareholders.Under the guidance of the theory of scale economy,synergy theory,transaction cost theory,etc.,the reasons for the conversion of mergers and acquisitions,the rationality of the stock issuance price,the reasonableness of the share conversion ratio,and the merger of Baosteel’s shares in the acquisition of WISCO The reason for the successful completion is analyzed.The analysis results show that:(1)There are four reasons in the transaction of Baosteel’s share swap WISCO: 1 lack of cash payment for mergers and acquisitions,high financing costs;2 control rights will not change before and after mergers;3 save transaction costs and obtain tax revenue;4 Optimistic about the development prospects of surviving enterprises,do not want to lose control.(2)The stock issuance price is reasonable,and it is reasonable to use the comparable company analysis method,comparable transaction analysis method,cash flow analysis method and historical price analysis method to verify the stock issuance price;(3)the proportion of stock exchange is reasonable,and the profitability analysis is adopted respectively.Law,asset value analysis method,EPS not diluted model,LG model verification conversion ratio is within a reasonable range;(4)M&A completion smooth reasons: 1 control rights have not been transferred;2 cash option pricing is reasonable;3 synergy The effect is significant.Finally,based on the analysis results of the paper,four questions are proposed for the issue of stock price evaluation method,the method of determining the share conversion ratio,and the cash option of dissident shareholders.First,reasonable choice of merger mode;second,guarantee The conversion ratio is objective and fair;third,improving the pricing mechanism for cash options;and fourth,improving the development environment for the capital market.The paper hopes to provide a feasible way for the steel industry to resolve overcapacity and adjust the industrial layout through the case study of Baosteel’s share purchase and acquisition of WISCO,and provide reference for the implementation of share swaps by listed companies.