The Payment Method And Effect Analysis Of Baoshan Iron And Steel Company’s Stock Exchange Merger With Wuhan Iron And Steel Company

For decades,the iron and steel industry has supported the rapid development of China’s economy and ensured the steady improvement of the country’s comprehensive strength.However,after experiencing rapid development,problems such as serious overcapacity,low industry concentration,declining economic efficiency and poor comprehensive competitiveness have become more serious.In order to help adjust and improve the current situation of the steel industry,the state has successively issued various national overall policies and special industrial policies,and encouraged the existing steel enterprises to integrate through merger.In view of this,driven by the state,industry and the company’s own conditions,Baosteel Corporation and WISCO,as the giant enterprises in China’s steel industry,have opened the road of merger as pioneers.Whether the merger can improve the situation of the industry and enterprises is particularly critical.Therefore,this paper selects the merger case of Baosteel Corporation and WISCO as the research object,and makes an in-depth study on the payment method and merger effect of Baosteel Corporation’s stock exchange absorption merger of WISCO.This paper uses case study method.First,based on the basic theory and related literature,this paper introduces the basic situation of Baosteel Corporation and WISCO,and combs the concrete plan of the merger,summarizes the whole implementation process and the basic situation after the merger.Secondly,this paper explores the merger payment method adopted by Baosteel Corporation and WISCO.The merger of Baosteel Corporation and WISCO adopts the method of share exchange payment,Therefore,this paper first analyzes and summarizes the reasons for Baowu merger to choose this kind of payment method,and uses four exchange ratio determination methods to calculate the standard range of exchange ratio,so as to evaluate the rationality of the share conversion ratio adopted by Baowu merger.Then it analyzes the influence of this payment method on the equity structure and capital structure after the merger and the mechanism of the merger effect.Through calculation and analysis,the research shows that the merger and reorganization of Baosteel Corporation and WISCO in the way of stock exchange absorption and merger is in line with the actual situation of both enterprises and the current situation of the industry.The exchange ratio set in the scheme is reasonable and protects the interests of both shareholders from infringement.This payment method is conducive to the realization of the effect of enterprise merger.Thirdly,the paper analyzes the effect of the combination of Baowu.On the one hand,the financial index analysis method is used to compare the situation of the enterprises before and after the merger.The research finds that in the short term after the merger,the indicators are significantly better,resulting in a synergistic effect,but in the long run,the merger effect is not strong,and the ability is weakened;on the other hand,it analyzes the merger effect of Baosteel Corporation’s non-financial dimension from the perspective of national policy response and fit,enterprise comprehensive strength and merger and integration effect.After analysis,it is considered that the merger has implemented various national and industrial policies,but the later task is still arduous.The innovative research and development capabilities have improved significantly in the short term after the merger,but they are not stable in the long term.However the overall comprehensive competitiveness has improved.In addition the enterprise has completed the integration work,the integration effect is more significant.Finally,this paper draws three revelations: first,the stock exchange absorption merger is more suitable for the integration of large central enterprises and state-owned enterprises;second,the appropriate payment method and share exchange ratio can ensure the smooth implementation of the merger plan and promote the realization of the effect of enterprise mergers;third,enterprises still need to focus on long-term merger and integration work and effects.At present,the current situation of China’s iron and steel industry has a certain restriction on the long-term effect of the merger.However,it is undeniable that the merger is of great significance to the long-term and stable development of both companies and China’s iron and steel industry.In the future,Baosteel Corporation also needs to carry out in-depth integration from horizontal to vertical to realize the real integration.The research experience and Enlightenment of this paper hope to provide practical experience and reference value for the continuous adjustment of steel industrial structure and the integration of central enterprises in the future.