A Case Study Of Zhongyuan Special Steel's Merger With COFCO Capital

With the development of a new round of mixed reform of state-owned enterprises,more and more state-owned enterprises have joined the wave of mixed reform of state-owned enterprises.Government agencies and regulators have also issued many encouraging policies to support the development of state-owned enterprises.The number of mergers and acquisitions among state-owned enterprises keeps increasing,and the scale of transactions is also getting larger.In addition,supply-side structural reform is deepening and reform of state-owned enterprises is gradually entering the deep-water zone.The determination of capital distribution,structural adjustment and strategic reorganization is basically clear.At the same time,m&a has become the important path for the reform of state-owned enterprise.Through the way of merger and acquisition,many state-owned companies make the enterprise vivid,break through the bottleneck in the development of state-owned enterprises and improve the enterprise operating efficiency,business performance and market competitiveness.CSR's merger with CNR and Baosteel's merger with Wuhan Iron and Steel are classic cases of mergers and acquisitions between state-owned enterprises.Many scholars have studied these cases and found that the overall strength of enterprises has been significantly enhanced after the merger.Under such a realistic and theoretical background,this paper takes Zhongyuan Special Steel as the case to study the motivation,performance and performance impact mechanism of merger and acquisition.CSR and CNR,Baosteel and Wuhan Iron and Steel are classic cases of mergers and acquisitions between state-owned enterprises.Many scholars have studied this and found that mergers and acquisitions helps to enhance the overall strength of the enterprise.In such a realistic and theoretical background,this paper takes Zhongyuan Special Steel as the case study object to study the motivation,performance and performance impact mechanism of Zhongyuan Special Steel's acquisition of COFCO capital.This paper adopts the case study method to study the motivation,performance and performance influencing mechanism of Zhongyuan Special Steel's acquisition of COFCO capital and analyze whether the acquisition of Zhongyuan Special Steel is conducive to the improvement of its business performance.First of all,from Zhongyuan Special Steel,COFCO capital and state-owned assets supervision and administration of three different main body,this article analyzes the reason of zhongyuan special steel mergers and acquisitions of COFCO capita.Research has shown that based on absorb the high-quality assets of COFCO capital,Zhongyuan Special Steel can realize the transformation and upgrading of its main business and improve the business performance of the enterprise,so as to avoid delisting and keep its listed resources.COFCO Capital participates in the merger based on the motivation of utilizing the listed resources of Zhongyuan Special Steel;SASAC hopes to promote the internal integration of state-owned assets through the merger and avoid the outflow of high-quality assets of state-owned enterprises.The second,using event study method,this paper studies before and after m&a of zhongyuan special steel's excess returns and the change of the cumulative excess yields and analyzes the market reaction of Zhongyuan Special Steel in the 30 days before and after the announcement.Research has shown that the downward trend of excess return rate and cumulative excess return rate of Zhongyuan Special Steel in the first 15 days after the announcement,explains the occurrence of m&a did not increase the wealth of shareholders.The market and investors in the short term holds negative attitude on zhongyuan special steel.The rising trend in the 15 to 30 days after the merger indicates that investors are more optimistic about the long-term development of Zhongyuan Special Steel.On this basis,this paper analyzes the changes of debt paying ability,profitability,development ability and operation ability of Zhongyuan Special Steel before and after the merger.The research shows that the merger and acquisition has improved the profitability,development ability and short-term solvency of Zhongyuan Special Steel to some extent,but the long-term solvency and operating capacity are poor.In order to further study the performance changes before and after the merger of Zhongyuan Special Steel,this paper analyzes the changes of economic added value and economic added value rate before and after the merger of Zhongyuan Special Steel.The research shows that the economic added value of Zhongyuan Special Steel decreases in the short term,but the merger and acquisition improves the economic added value of Zhongyuan Special Steel and also increases the economic profit of the enterprise in the long term.On this basis,this paper also compares the economic added value rate of Zhongyuan Special Steel with that of the whole industry and finds that the EVA rate of the whole industry keeps declining,while that of Zhongyuan Special Steel shows a rising trend.Thirdly,this paper analyzes the performance changes of Zhongyuan Special Steel from three non-financial indicators:revenue structure,employee structure and innovation ability.It is found that the income source of Zhongyuan Special Steel is more optimized,the overall quality of employees is significantly improved and the innovation ability is significantly enhanced after the merger and acquisition.Finally,this paper analyzes the influence mechanism of performance from multiple perspectives and finds that the risk prevention and control ability,financing ability,innovation ability and synergistic effect of Zhongyuan Special Steel are significantly enhanced after the merger,thus it improvs the business performance of the enterprise.Through the case study of Zhongyuan Special Steel's merger with COFCO capital,the purpose of this paper is to clearly understand ins and outs of the mergers and acquisitions,to determine corporate performance's desired effect,to complement industry-related case studies and provide theoretical support for more state-owned enterprises' reform in the futher.At the same time,it also provides literature reference for more scholars to study the listing of mixed reform enterprises in the future.In addition,this paper hopes to use the new model of state-owned enterprise merger and acquisition formed by Zhongyuan Special Steel in this merger and provides new ideas and valuable practical experience for more mixed reform enterprises to be listed.