Research On The Motivation And Performance Of Tianqi Lithium’s Cross-border Merger And Acquisition Of SQM

With the introduction of the carbon neutrality concept in the world,the lithium industry has ushered in an unprecedented market.The growth expectation of the new energy vehicle market drives the continuous growth of demand for lithium batteries,and further expands the scale of the lithium battery positive electrode material market.The world lithium battery industry has entered a high-speed development stage.When a company reaches a certain level of possession and control over lithium ore,its pricing power will be greater.In addition,the production cost of a company is also determined by the resources it possesses.Therefore,the research and development of industrial chain layout and low-carbon technologies,as well as efficient integration and control of upstream lithium resources,have become crucial.This article takes Tianqi Lithium’s cross-border merger and acquisition of SQM in Chile as an example to study the motivations and performance of its cross-border merger and acquisition events.Firstly,review the relevant literature on the motives and performance of mergers and acquisitions,and propose a theoretical basis for their management.Next is the introduction of the case,which explores the development and trends of the lithium industry and introduces the merger and acquisition parties;Subsequently,from multiple perspectives such as economic environment,national policies,and global strategic deployment of enterprises,in-depth research was conducted on the motives behind the merger and acquisition event,and the financing methods and transaction process of the merger and acquisition event were elaborated;When studying the performance of this M&A event,this paper starts from the long and short term,and uses the event study,financial indicator analysis,EVA analysis and non-financial indicator analysis to comprehensively evaluate the performance;Finally,based on the above analysis and discussion,the conclusions and suggestions of this article are drawn.After the analysis of this paper,it is found that in order to complete the purchase of the equity of SQM,Tianqi Lithium added 3.5 billion US dollars in cross-border M&A loans,the asset-liability ratio increased significantly compared with before the merger,and the financial structure changed.The sharp and continuous decline in lithium prices in the same year of the merger and acquisition caused the company’s business expansion,financial position and operating performance to be significantly and adversely affected,and it was not favored by the market in the short term,and the integration effect of the merger and acquisition event in the short term was not good.In 2019,Tianqi Lithium returned to a steady and steady business mode and tried its best to digest the financial impact of this merger and acquisition to reduce financial leverage.In 2020,with the rise of the global "dual carbon" boom,the new energy industry chain has entered the overall outbreak period,because Tianqi Lithium has obtained a large number of lithium resources through mergers and acquisitions,and realized the layout of the world’s best quality lithium ore and lithium salt lake resources,while ensuring the supply of resources,minimizing the cost of raw materials,and combining with the company’s leading lithium compound production and processing level,maximizing the profit margin of lithium products.At the same time,the company took timely measures to eliminate the adverse impact of huge debts,through the introduction of IGO and listing on the Hong Kong Stock Exchange,the net proceeds raised were given priority to repay the outstanding balance of the M&A loan due to the purchase of SQM’s equity,the asset-liability ratio in 2022 was significantly reduced,and various financial indicators exceeded the pre-M&A level,and the long-term effect of M&A was better.Finally,through the analysis of the case,this paper puts forward some suggestions for the mergers and acquisitions of the lithium battery industry.When carrying out mergers and acquisitions,enterprises should choose appropriate M&A methods and adopt diversified financing,control the proportion of huge debts,need to integrate accordingly after mergers and acquisitions,do a good job in risk prevention,and continuously enhance the development of core competitive businesses to achieve synergies.