Research On Financial Performance Of Baowu Group’s Merger And Acquisition Of Masteel

During its long history of development,the steel industry has become an important strategic support for the country’s economic development,but in its continuous exploration,there are also some problems,such as overcapacity as well as a low degree of industrial concentration.In order to cope with such adverse effects and promote the optimisation of the layout and product structure of the steel industry,in 2016 the state has clearly proposed that the requirements of supply-side reform should be strictly implemented in the steel industry,and has also introduced a series of policies regarding the integration of China’s steel enterprises to promote the reform of state-owned steel enterprises and even private steel enterprises.This paper firstly analyzes the case of Baowu Group’s merger and acquisition of Masteel Corporation and summarizes the research on the motivation and performance of M&A at home and abroad,then briefly explains the concept and theoretical basis of M&A,secondly introduces the basic situation of both companies,and compares the specific process of M&A and the change of shareholding structure,and then focuses on the motivation of M&A from both inside and outside the company.Then,we analyze the motivation of this M&A from two perspectives.This is the core part of the paper,which focuses on the effect of the M&A of Masteel by Baowu Group,and analyzes the effect of the M&A,the longterm performance of the M&A is analyzed from the financial perspective using the financial index analysis method.The financial index analysis method compares and analyzes the financial indexes of both M&A companies during 2017-2021 from four aspects: operating capacity,solvency,profitability,and development capacity,respectively,and finally,the post-merger performance of Baowu Group and Masteel is comprehensively evaluated and summarized.The results of this paper show that the long-term performance of both companies have improved after the M&A of Baowu and Masteel.In terms of long-term performance,the M&A event has not significantly affected the solvency and profitability of both companies,and Masteel’s operating capacity has improved,while the M&A has not had a significant impact on Baowu’s operating capacity.In terms of long-term performance,the M&A did not have a significant impact on the solvency and profitability of both companies.Finally,by summarizing the analysis of this M&A event,some insights about M&A are extracted from it: successful M&A helps to improve financial performance;strong joint venture increases corporate M&A efforts;improves the added value of products to improve the industrial chain;and integrates internal structure to complete capacity replacement.It is expected that the research and analysis in this paper can provide some reference and guidance for the enterprises that implement "strong combination" in the future.