Research On The Synergy Effect Of Baosteel’s Merger With Wuhan Iron And Steel

In 2016,due to the continuous depression of foreign economy and the depression of domestic market,Chinese steel enterprises are under unprecedented pressure of survival and development,and most of them have low profits or even losses.At the same time,the historical problems of overcapacity,low efficiency and low industrial concentration in China’s steel industry are becoming more and more serious.In such a severe environment,the "supply side structural reform" advocated by the state came into being,and the "de capacity" work has become an important task of China’s steel industry.M & A is an important way for China’s iron and steel industry to achieve the goal of improving industrial concentration,optimizing industrial layout and "de capacity".Therefore,there is a wave of cross regional and regional M & A in China’s iron and steel enterprises.It is necessary to analyze the synergy effect of M & A and reorganization of iron and steel enterprises.Therefore,taking Baosteel’s merger and acquisition of WISCO as an example,this paper makes an in-depth analysis and Discussion on the motives and synergies of the merger and acquisition of steel enterprises in the context of supply side structural reform.Firstly,this paper summarizes the connotation,classification and evaluation methods of synergy effect of M & A,which provides a theoretical basis for the subsequent analysis of synergy effect of Baosteel’s M & A of WISCO.In the case part,the internal and external motivations of Baosteel’s M & A of WISCO are explained,and the financial index analysis method is used to measure the performance of Baosteel before and after the M & A,and analyze the whole process of M & A.Then use discounted cash flow model to explore whether the synergy effect of Baosteel’s M & A activities has been effectively exerted.At last,the paper summarizes the whole paper with the inductive method,and concludes that Baosteel’s merger and acquisition of WISCO has achieved a certain degree of synergy in the short term.On this basis,it provides further suggestions and prospects for the M & A of China’s iron and steel industry,hoping that the research can provide theoretical and practical reference for the M & A of Baosteel and other iron and steel enterprises.