The Study On Transnational Merger And Acquisition Case Of Valin Group

In recent years,with the development of accelerated industrialization process,the demand for iron ore is dramatically growing in China’s iron and steel production enterprises.There are many kinds of abundant mineral resources in China.However,the iron ore in domestic is characterized by lower-grade,multiple-impurities as well as high-cost,which leads to the great reliance on the external minerals for the domestic steel industry.As a consequence,the iron ore materials are completely monopolized by three major international iron ore producer,resulting in high cost of raw materials and development restriction of China’s iron and steel enterprises.The volume of iron ore imports from overseas in Valin Group is up to 50% of its gross requirement,so an investment cooperation partner in the field of iron ore production is critically-needed to implement the globe resource strategy and grasp the internal advantage of iron ore resources.Due to the financial crisis in 2008,there is a slump in share price of FMG,and this means its valuation is significantly undervalued.As a matter of fact,it provides an excellent merger opportunity for Valin.Hence,under the background of the research status of overseas and domestic transnational merger and acquisition,the general characteristics of Chinese enterprises transnational merger and acquisition are investigated in terms of the investment subject,regional distribution,merger mode,and target selection based on the the internalization theory,the eclectic of international production as well as enterprise value underestimate theory.Meanwhile,selective analysis with respect to merger process,implementation strategy and achievement effect is made using the case analysis method,SWOT analysis method and financial integration performance analysis method.It can be concluded it is the best time for Valin to implement the merger and acquisition of FMG in the case of significantly undervalued valuation on account of the financial crisis in 2008.However,because of certain absence of the post-merger management in Valin,the expected integration synergy effect is unrealized.This paper aims to analyze and summarize the experiences and lessons in the process of the FMG merger and acquisition,providing a proper reference to the transnational merger and acquisition of Chinese enterprises.