Financial Performance Analysis Of Baowu Group's M&A Of Masteel

As one of China's strategic industries,iron and steel industry is of great significance to the development of national economy,and its development is relevant to national security.After the reform and opening up,China's iron and steel industry has made rapid progress.However,due to excess capacity and other restrictions,the development speed has slowed down.In recent years,China has deepened the supply-side structural reform and taken a series of bold measures to reduce overcapacity and make structural adjustments,which has exerted a great impact on the iron and steel industry.Under the guidance of national policies,Baosteel and Wuhan Iron and Steel merged in 2016.In May 2019,China Baowu and Masteel restructured,which directly affected the performance of Baosteel(600019.SH)and Masteel(600808.SH).Merger and reorganization is a process of reintegrating resources,which can improve the efficiency and comprehensive competitiveness of enterprises.The financial performance of Baowu Group's merger with Masteel is worth discussing.This paper constructs a financial performance evaluation index system based on theories including merger and acquisition theory,enterprise performance evaluation,scale economy theory andresource optimal allocation theory.,Using this system,it calculates the relevant financial indicators of Baowu Group before and after the merge.The following conclusions are drawn:from the perspective of financial indicators,the merger is a success not only for Masteel itself but also for the whole Baowu Group.Since financial performance can reflect the results of mergers and acquisitions,such as scale effect,which can be used as an indicator to judge whether the national strategic goal has been truly achieved,it is safe to conclude that the strategic goal of improving industrial concentration and enhancing international competitiveness has been basically achieved.This paper further puts forward several performance improvement suggestions for the follow-up development of Baowu Group's merger and acquisition.Moreover,it discusses Chinese steel companies based on the case of Baowu Group's M&A of Masteel.,and proposes that(1)clarify M&A targets and formulate M&A plans;(2)prevent financial risks and enhance competitiveness;(3)follow government guidance and accelerate structural adjustments(4)enhance crisis awareness and make long-term plans,make reasonable suggestions to increase the competitiveness and voice of China's iron and steel industry in the international market.This study can be used as a frame of reference for financial performance evaluation of enterprises and M&A activities of large steel industry in the future under the new environment.