A Study On The Failure Of Overseas M & A In Resource - Based Enterprises

Chinese economy is continuing to take off, meanwhile, the demand of the market for various resources is also increasing.At the same time, a "seller’s market" feature presents in the international resources market, which confront our country with an important test of the resources situation. The financial crisis of 2008 brought M&A of Chinese enterprises great opportunities, besides, the"going out" strategy and a series of policies which proposed by the government support China’s resource-based companies began to have an international perspective, to go abroad and acquire the resources. However, going out process is not smooth, various failure cases happenedMultiple case study method was used in this paper to study four distinctive overseas unsuccessful merger and acquisitions (M&A) cases:Sichuan Hanlong Conglomerate failed to acquire Sundance,which is an Australian iron ore enterprise, Chinalco failed to acquire SouthGobi, China National Gold was not able to merge ABG, Shenghe Resources did not merge Integral Materials Investment Limited.I analyzed and summarized the external and internal reasons for these failures. Policies and political influence of both countries and the overall economic environment are the main external reasons, while internal reasons are involved with the limited ability of corporate finance, limited public relations capacity, and limited valuation and acquisition negotiations.According to the reasons why resource-based enterprises fail to complete the M&A, the paper puts forward some suggestions from both the policy and operation aspects.In the future,we should do something to promote the process of M&A,such as Diluting the role of government in the state-owned enterprises, improving overseas acquisitions policy and oversight mechanisms..broadening the financing channels for enterprises, gradually relaxing foreign financing,carrying out public relations, reducing political risk, seeking merger partners to form alliances.I hope this paper could provide some reference for future overseas mergers and acquisition of resource-based enterprises, in order to increase the success rate of overseas mergers and acquisitions.