Analysis On The Motivation And Performance Of Cross-border M&A In The New Energy Materials Field

With the growing ecological crisis,promoting the optimization of energy structure has become an inevitable strategic choice.Fuel cars are limited by the reserves of traditional energy sources and the damage caused by exhaust emissions to the environment,their development is in decline.New energy vehicles have emerged and led to the boom of its core raw material lithium resources.China is the main consumer of new energy products,but lithium resources are highly dependent on imports.To ensure the safety of raw materials,China has set up a series of policies to support the exploration and exploitation of overseas high-quality lithium mines,cross-border M&A has become the first choice for the related enterprises which plan to enhance their comprehensive capabilities.However,due to the large scale of lithium resource enterprises,the failure rate of cross-border M&A is high.Therefore,It is critical to analyze exactly what drives cross-border M&A and the impact it will have on firm performance.As the ’’bellwether’’ of China’s lithium material enterprise,Tianqi Lithium has frequently conducted cross-border M&A since listed on Shenzhen Stock Exchange in 2010,and successfully acquired Talison in 2014.Then in 2018,it acquired Chilean SQM,which has the world’s highest quality salt lake lithium resources and well-developed technology.This M&A is crucial to the construction of the vertical integration of the whole industrial chain of Tianqi Lithium,and it will also affect the business decisions of other enterprises in the industry,so the research is significant.This paper combines quantitative and qualitative analysis to provide a comprehensive analysis of the motivation and performance of this M&A.Firstly,this paper introduces the background and significance of the study,and determines the research framework and methodology of this paper by collating the literature of scholars from home and abroad on the motivation and performance analysis of cross-border M&A.Meanwhile,it is found that the research on crossborder M&A of lithium resource enterprises and the research on the combination of financial and non-financial performance are relatively few for the time being,which leads to the innovation point of this paper.Secondly,a brief introduction to the characteristics of lithium materials and the background of both parties of the M&A was conducted to review the process and dig deeper into the motivation of this M&A.Then,this paper adopted the event study method,financial index analysis method,and non-financial index analysis method to analyze the M&A performance based on the motivation,and selected data related to Tianqi Lithium and its major competitors for a total of five years before and after,finally drew conclusions.The conclusions of this paper are as follows: To begin with,Tianqi’s motivation of acquisition is to obtain high-quality lithium resources,reduce production costs,develop overseas markets,improve innovation capability and enhance overall competitiveness.Then,the performance of M&A is that this M&A has obtained positive short-term performance.The long-term performance,except for the improvement of production and operation capacity and innovation capacity,the operation,profitability,debt servicing and development capacity and other nonfinancial aspects of performance have declined and did not achieve Tianqi’s motivation,and the failure is more than success.The study concludes that the single financing method caused the debt crisis and excessive financial pressure,as well as the inappropriate timing and integration of the M&A.The study concludes that Chinese companies should pay attention to broaden the financing method,grasp the timing of the M&A and strengthen the integration when they make cross-border M&A.