Research On M&A Performance Of State-owned Resource Enterprises

China’s resource-based enterprises mainly include oil,coal,natural gas,black metal,non-ferrous metal,non-metallic mining and so on.The state-owned resource enterprise is the enterprise which is engaged in the resource industry controlled by the state capital.As a pillar industry of China’s economic development,resource-based industries play an important role in promoting China’s economic growth and play a decisive role in the economic field of our country.China’s state-owned capital has absolute control over petroleum,coal and other strategic industries,and has strong control for non-ferrous metals and other key areas.State owned enterprises have absolute advantages in China’s resources industry and occupy an important position.At the same time,the whole resource industry’s M&A is frequent.Therefore,studying the M&A status of state-owned resource-based enterprises is of great significance for the development of resource-based industries in China.The resource-based enterprises in China have long been insufficient in their ability to withstand the market risks.Because of excessive and concentrated access of resource-based enterprises,there is serious overcapacity,unreasonable resource allocation,outstanding structural conflicts and poor mechanism for withdrawal of production capacity;business models are difficult to improve,raw material self-sufficiency rate is low and mainly relied on imports,and it may be greatly affected by international prices affect;import resources are faced with uncertainties such as that it is easily influenced by national policies and laws,and the control over resources is not strong.The production technology is backward and the technological innovation capability is insufficient;while the national environmental standards are continuously improving,thus the pressure of environmental protection faced by resource-based enterprises is continuously increasing.In the 13 th Five-Year Plan period,resource-based enterprises are faced with the pressure of transformation and development.Due to the reason that mineral resources are the core assets of mineral resource-based enterprises,the traditional development path of the resource-based enterprises is the continuous acquisition of resources for extension expansion.In the period of "12th Five-Year",Yunnan Chihong has gradually established its own core resource advantages through large-scale centralization of merger and acquisition,and the details are as follows..During 12 th Five-Year,Chihong ensured the strategic vision of “Chihong of billion,being the international benchmark".It has carried out 8 mergers and acquisitions;the price of eight merger transaction is about 6.8 billion yuan.From 2011 to 2015,the total assets of the company grow rapidly from 9.2 billion yuan to 33.49 billion yuan.The company continued to expand through mergers and acquisitions.As for the relationship of the company to conduct a M&A and the company being acquired,they may be related and non-related.;For regions of the merger,there is domestic and foreign M&A;there are different methods of payment for mergers and acquisitions like cash payments and" cash + equity ";the financial situation of the acquirer may be good or bad;the company being acquired may be the subsidy of the acquirer or not;for the assets being acquired,they may be in normal operation,or in the exploration stage with uncertain prospects;there are also M&A with a high premium or a low premium;some assets can be in normal operation after the merger,while some may suffer from the impairment since they do not comply with the national industry standard.In conclusion,different types of M&A took place in Chihong in a centralized largescale,it is typical for research on the factors of the performance of mergers and acquisitions in state-owned resource-based enterprises,which is helpful to analyze the influence of various factors on the M&A’s performance of state-owned resources.At the same time,by studying the performance of M&A and the formation of overcapacity during the"12th Five-Year",we can have a better understanding to study how resource-based enterprises do the supply side structural reform and further M&A during the"13th Five-Year" period.The research on the performance of Chihong is divided into short-term performance and long-term performance.And we use the event study method by calculating CAR(cumulative abnormal return)to analyze the short-term performance,and use BHAR(buy-and-hold abnormal return)and financial indicators to analyze the long-term performance.The study found that the company’s merger and acquisition in the 12 th Five-Year has a positive impact on the short-term performance,but the company’s long-term performance is poor after the merger.As for CAR(cumulative abnormal return)index,merger and acquisition has a positive impact on the short-term performance of the company.The market is more optimistic about a non-related acquisition than a related acquisition.,Foreign acquisitions have a better performance than domestic M & A.And the acquisition of the remaining equity from subsidiary is doing better than acquiring a non-subsidiary company.In terms of HBAR(buy-and-hold abnormal return),the M & A performance that the acquired company is in normal production is better when compared to M&A that the merged companies are still in the exploration stage.When the merged company is profitable,it is better than it with the unprofitable ones.The performance of M & A is better when two parties are associated than that of unrelated M & A.The performance of M & A in China is better than that of foreign M & A.It is the same way with domestic M&A and the acquisition that has asset impairment after M&A.Finally,combined with the analysis of the financial indicators,we find that the factors affecting the performance of M & A include c the macro economic factors,policy,the exploration situation of the merged company and financial conditions.Therefore,we recommend the resource-based enterprises to focus on the these risk in future M&A.