Research On Strategies And Effects Of Overseas Mergers And Acquisitions Of Chinese Resource-based Enterprises

Amid the steady growth of the economy,China’s demand for upstream resources continues to surge.As many critical resource-producing regions are located overseas,a large number of resource-oriented enterprises have sought to utilize overseas mergers and acquisitions as a key measure to secure resources,with particular interest in lithium resources.However,some enterprises,eager for quick results,have invested substantial capital,only to find their M&A outcomes unsatisfactory,even leading to their own predicaments.To achieve desirable M&A results,enterprises must develop appropriate strategies based on their circumstances and market conditions.As leading companies in China’s lithium resource industry,Ganfeng Lithium and Tianqi Lithium have engaged in a series of overseas M&As over the past few years.However,their differing M&A strategies have led to significant disparities in their positions amid the subsequent volatile market.This study,building on existing literature and employing scale effect theory,synergy effect theory,and value chain theory,selects Ganfeng Lithium and Tianqi Lithium as comparative cases to examine their series of M&As between2017 and 2021.The paper first introduces the industry background and M&A motivations of the two enterprises,followed by an analysis of their M&A processes to explore their strategic differences.Lastly,the value chain model,financial analysis,and event study method are employed to evaluate the M&A performance from multiple perspectives.Through comparative analysis,the paper finds that the differences in outcomes between the two cases are mainly attributed to discrepancies in target selection,investment methods,and financing strategies,as well as local political pressure.It then summarizes the implications for resource-oriented enterprises in developing overseas M&A strategies:(1)cautiously choose M&A targets and reasonably assess their value;(2)flexibly select investment methods and raise funds through multiple channels;(3)pay attention to overseas political risks and focus on cultivating overseas M&A talent.The paper’s main innovations lie in two aspects:(1)by conducting a dual-case comparative study targeting resource-oriented enterprises,it highlights the differences in outcomes resulting from distinct M&A strategies;(2)by considering all M&A cases within the same time period as a whole for comparative research,it reflects the overall differences in M&A strategy effectiveness between the two enterprises during that period.