Baosteel’s Acquisition Of WISCO:Pricing,Payment And Market Reaction Analysis

In recent years,our country’s economic growth is slow,in the economic downturn stage,and the government has put forward relevant economic development policies according to the economic development situation of our country.The most important of which is the Supply-side Structural Reform,and the iron and steel industry is the important supporting industry of the economic development of our country,and it is the most important part of the structural reform of the supply side.Therefore,how to optimize the allocation of steel resources and reduce costs has become an urgent problem for the government.This article chooses the merger and acquisition events between the two big giants of the iron and steel industry as the research object,comprehensively analyzes the whole process and behavior of the merger and acquisition of WISCO in Baosteel,summarizes the experience and finds the problems,and puts forward the research and solution of the analysis and solving problems of the similar mergers and acquisitions,with a view to standardizing the merger and acquisition of the enterprises.It provides experience and reference for behavior and scientific merger decision.This article begins with the theory of M & A,including the definition of M & A,the valuation of M & A,and the definition and characteristics of the merger and acquisition,and introduces the related theories about the motivation of M & A,including the transaction cost theory,efficiency theory and market power theory.Secondly,this article analyzes the process and motivation of Baosteel’s acquisition of WISCO,and analyzes the causes of the merger between Baosteel and WISCO.In general,there are two internal factors that affecting the merger and acquisition of two companies,On the one hand,in recent years,the poor operating performance and single business types are the main reasons.On the other hand,the strategic reorganization of Baosteel is also the internal requirement of the expansion of the company’s management model and the cultivation of the world’s first-class steel enterprises.External motivation is mainly to eliminate competition in the same industry,resolve excess capacity,increase industrial concentration,and actively promote government.Third,in this paper,we use capital asset pricing model and compare the historical transaction price to analyze therationality of the exchange price of Bao Wu’s M & a transaction.Fourth,this article analyses the mode of payment for M & A,On the one hand,we analyze the factors that affect the choice of payment methods,the reasons for the choice of the way of exchange payment and the advantages and disadvantages of the exchange payment mode,on the other hand,make use of the L-G model to determine the appropriate proportion of the share transfer area,so as to analyze the rationality of the swap interval.Through analysis,it is considered that the determination of the proportion of stock swap is reasonable.Fifth,this article analyzes the market reaction of the merger and acquisition of WISCO in Baosteel by the method of event study.The results show that the merger has a positive impact on Baosteel.Finally,the merger is summarized,and relevant suggestions are put forward from three levels: enterprise,market and government.