Research On Financial Risk Of Tianqi Lithium’s Cross-border Merger And Acquisition Of SQM

In recent years,with the increasing sales of new energy vehicles,lithium mineral resources have become scarce resources.However,the utilization rate of lithium resources is very low because most of the lithium resources are distributed in high altitude areas such as Qinghai-Tibet Plateau,bad climate and poor construction conditions.Therefore,many Chinese lithium mining enterprises aim at overseas and compete for overseas lithium resources,hoping to occupy a place in the lithium resource market.However,according to the statistical report of Deloitte,the failure rate of cross-border M&A of Chinese enterprises is as high as 80%,the most fundamental reason is that M&A enterprises do not timely and effectively identify the financial risks they face in the process of cross-border M&A.Therefore,it is very important to prevent and control the financial risks in cross-border mergers and acquisitions.This paper studies the case of Tianqi Lithium’s cross-border merger and acquisition of SQM company in 2018 by using literature research method,case study method and qualitative and quantitative analysis method,analyzes the financial risks existing in the cross-border merger and acquisition of Tianqi Lithium,and summarizes some inspirations suitable for the cross-border merger and acquisition of lithium mining enterprises.This paper firstly reviews the literature on cross-border M&A at home and abroad,and expounds the related concepts and theories.Secondly,the case of the merger and acquisition of the two parties,the process of merger and acquisition of the motivation for a simple analysis.Thirdly,taking the selected cases as the research object,this paper makes a deep analysis of the four aspects of financial risk of Tianqi Lithium in the cross-border merger and acquisition,and uses the F score model to evaluate the financial risk quantitatively.Finally,some enlightenments are obtained according to this case study.The research results show that Tianqi Lithium does not consider the information asymmetry and the influence of the adjustment period of the lithium industry before the merger and acquisition and blindly buys SQM company at a high price,resulting in the risk of overpricing.In the merger and acquisition,Tianqi Lithium mainly relies on loans to raise funds for the merger and acquisition,and the imbalance of financing structure makes the asset-liability ratio of the enterprise rise sharply after the merger,and it faces great pressure to repay the debt.At the same time,Tianqi Lithium uses cash to pay for the acquisition price,which makes the enterprise face cash flow pressure in the later stage.In addition,because Tianqi Lithium has not obtained the control right of SQM in the cross-border merger and acquisition,it cannot integrate the two parties effectively.Because there are few researches on the financial risks of cross-border mergers and acquisitions of lithium mining enterprises in China at present,this paper hopes to provide some reference for lithium mining enterprises to prevent the financial risks of cross-border mergers and acquisitions in the later stage.