Research On Synergy Effect Of Enterprise Mergers And Acquisitions

The steel industry is an important traditional industry in China and has far-reaching impact on China’s economy,science and technology and military.In the past few decades,China’s steel industry has developed rapidly,providing strong support for the economic construction of New China.However,in recent years,problems such as low industrial concentration,severe overcapacity,and insuff-icient international influence have highlighted problems,and the industry needs to be upgraded and transformed.In recent years,China’s steel industry performance has declined overall,and large steel companies have poor profitability.In order to promote the recovery of the steel industry,the government has successively issued a series of policies to encourage Chinese steel companies to re-allocate resources through horizontal mergers and acquisitions,aiming to comprehensively improve steel enterprises.The level of profitability and market competitiveness,on the other hand,can also effectively remove excess capacity.Baosteel and Wuhan Iron and Steel,as established steel companies,each have strong production technology and core products.The combination of the two provides a good demonstration for the merger and reorganization of iron and steel enterprises,and provides ideas for large state-owned enterprises to seek market competitiveness.This paper selects Baosteel’s acquisition of WISCO as a research case.After introducing the general situation of mergers and acquisitions,the motivation of mergers and acquisitions,and the M&A process,this paper verifies whether the merger achieves synergy effect and explores and analyzes the specific reasons for achieving synergy.This paper uses EVA to analyze the economic value added before and after the merger and acquisition of Baosteel and Wuhan Iron and Steel Co.,Ltd.,and compares the synergistic effects of the financial indicators of Baosteel and Wuhan Iron and Steel from the three aspects of operation,management and finance before and after the merger:The ability,growth ability and market possession ability are analyzed.The management aspects are analyzed from the cost control level and asset management level respectively;the financial aspect is the index analysis from the solvency and tax-saving abilityThe research shows that both parties have obtained higher economic value added in the short term,indicating that the merger is more successful in the short term,resulting in a synergistic effect of "1+1>2".From the perspective of financial indicators analysis,after the merger,Baosteel has produced obvious synergistic effects in terms of operation and finance,and achieved a certain degree of synergy in management.In terms of market performance,Baosteel achieved a significant increase in production efficiency due to the scale effect brought by mergers and acquisitions.The market share increased year by year in the macro background of the domestic steel industry’s active capacity,and the market value and brand effect also followed.Promotion has created corresponding benefits for corporate shareholders.In the short term,this merger brings positive synergies to the acquirers.