Analysis Of The Motivation And Economic Effect Of Baosteel’s Absorption Of WISCO

The iron and steel industry is an important part of the close relationship with China’s national economic development and an important "food" for the future production and development of China’s manufacturing industry.In China’s current steel industry with severe overcapacity,low industry concentration and fierce market competition,mergers and acquisitions have become a rational allocation of optimized resources for the steel industry,achieving sustainable long-term development and expansion,and enhancing international competition.An important method of force.This paper starts with the theoretical aspects,and briefly explains the definition of M&A and related concepts,the types of mergers and acquisitions,and the classical theoretical basis of M&A motivation.Then,from the perspective of mergers and acquisitions,this paper introduces the merger process of Baosteel’s absorption of WISCO,the determination of the purchase date,and the specific merger plan.Then this paper analyzes and studies the motivation of Baosteel WISCO merger from two levels of internal motivation and external motivation.This paper believes that the external motivation of this merger is mainly based on the background of supply-side reform,resolving overcapacity and improving industry.Concentration and improvement of international influence,etc.,the internal motivation is mainly due to the poor operating performance of WISCO,the high production cost of products and the shortcomings of Baosteel.Then,this paper analyzes the short-term economic effects of Baosteel’s merger with Baosteel by event research.The research shows that Baosteel,as the acquirer,has obtained a negative cumulative excess return rate,indicating that the merger is unsuccessful in the short term,and the market has performed on its mergers and acquisitions.Not optimistic,and WISCO as a target company has achieved positive effects in mergers and acquisitions,indicating that the M&A effect of M&A companies is much better than the M&A effect of M&A parties.Then use the entropy method to establish a long-term economic effect evaluation system to evaluate the long-term economic effects of the mergers and acquisitions.The five major tasks of the national supply-side reform are “de-capacity,de-stocking,deleveraging,cost reduction and short-boarding”.The evaluation indicators were selected in five aspects.The results showed that the effects of three aspects of de-capacity,cost reduction and short-boarding were significantly improved,while the effects of de-leveraging and de-stocking did not meet expectations.Overall,this absorption merger has improved Baosteel’s long-term economic results.The conclusions of this paper indicate that Baosteel has achieved the goal of eliminating excess capacity and increasing industrial concentration by absorbing and merging WISCO,which not only promotes the upgrading of the industrial chain of the steel industry,but also enhances the competitiveness of China’s steel industry in the international market.The merger also pointed out the direction for the future development of other steel companies,and has certain reference and reference significance.