After China Baowu Merged Maanshan Iron and Steel Group: More Mergers on the Road

category:Finance
 After China Baowu Merged Maanshan Iron and Steel Group: More Mergers on the Road


Since then, the status of Ma Gang Group has changed from provincial state-owned enterprises to central sub-enterprises. Maanshan Iron and Steel Group is a large-scale iron and steel joint venture in China. Its shares are listed companies with A + H shares. According to the official website of Maanshan Iron and Steel Group, Maanshan Iron and Steel Group has 43,000 employees and 20 million tons of steel production scale, forming a coordinated development pattern of three leading industries: iron and steel industry, upstream and downstream related industries and strategic emerging industries. In 2017, Ma Steels crude steel output was 19.71 million tons, total assets was 91.8 billion yuan, operating income was 79.6 billion yuan, and total profit was 5.61 billion yuan.

According to the official website of China Baowu Group, Baowu has 739.5 billion yuan in assets and 70 million tons in capacity, ranking first in China and second in the world. In 2018, China Baowu continued to maintain the leading position in the industry, achieving steel output of 67.25 million tons, total operating income of 438.62 billion yuan and total profit of 33.837 billion yuan. After the merger of Ma Steel and Baowu, the steel production capacity of both will reach 90 million tons. A new Chinese giant iron and Steel Group will stand in the world steel forest from now on.

As a flagship of Chinas iron and steel industry, China Baowu has successfully restructured Chongqing Iron and Steel in the form of fund in recent years. However, in view of the complexity and diversity of fund background, China Baowu is only one of the M&A shareholders behind it. Nowadays, Maanshan Iron and Steel Group, which has a larger volume, has brought more imagination to the future of the steel industry. In this regard, Economic Observation Network interviewed Wang Guoqing, director of Langer Iron and Steel Research Center. The following are the main contents of the interview:

According to the development plan of China Baowu Iron and Steel Group Co., Ltd. (2016-2021), Baowu Iron and Steel Groups iron and steel business maintained a capacity scale of 70-80 million tons in 2016-2018. From 2019 to 2021, the capacity of iron and steel increased to 80 million tons to 100 million tons. Through years of integrated development, Baowu Groups iron and steel production capacity has reached 70 million tons, but it is still 30 million tons away from the target of 20.21 billion tons. In order to achieve the goal of capacity scale, mergers and acquisitions have become an important way to develop the capacity scale of iron and steel enterprises under the background of reduction replacement of iron and steel industry. Especially for Baowu Group, which has the experience of restructuring, it is more willing to adopt the restructuring mode to achieve capacity objectives. At present, the steel production capacity of Masteel has reached 20 million tons, and the restructuring of 10 million tons of enterprises will help Baowu Group to achieve the production capacity target of 100 million tons.

Wang Guoqing: From the point of view of product line, Baowu Groups sales of silicon steel are the first in the world, and cold-rolled automobile plate is the third in the world. It provides high-quality steel for downstream industries such as automobile, machinery, household appliances, energy, ship, marine engineering, nuclear power construction, transportation and so on. Maanshan Iron and Steel Group has advanced cold and hot rolled sheet, color coated sheet, galvanized sheet, H-section steel, high-speed wire rod, high-speed bar and wheel tyre production lines. The three series products of long steel, strip and axle have been upgraded and replaced in an all-round way. The products of wheel, H-section steel, cold heading steel and pipeline steel have independent intellectual property rights and core technology. The products of wheel and H-section steel have won the title of China Famous Brand.

ECONOMIC OBSERVATION: After the acquisition, is it possible for China Baowu Group to continue acquisition in the future to expand its own size?

Economic Observation Network: As a central enterprise and a provincial state-owned enterprise, both sides can suddenly announce the free transfer of equity without basic outside knowledge, which subverts the public perception of the previous difficult combination of central and local state-owned enterprises. Baowu and Maanshan Iron and Steel can be integrated. How do you analyze and view them?

Wang Guoqing: Baowu Group, as the leader in the industry, is a central enterprise affiliated to the SASASAC of the State Council. Because of its advanced production and management level, it has been recognized and supported by many local governments in merger and reorganization. The merger of Baowu Group with Maanshan Iron and Steel Group is not the first case for central enterprises to reorganize local state-owned enterprises. As early as 2007, Baosteel Group reorganized Bayi Iron and Steel in Xinjiang. In 2008, the National Development and Reform Commission formally agreed that Guangdong and Baosteel should carry out the pre-project work of Zhanjiang Iron and Steel Base. Baosteel also merged and reorganized Shaogang and Guangzhou Steel. In 2017, Baowu Group reorganized Chongqing Iron and Steel in the form of four-source fund. After reorganization, Chongqing Iron and Steel realized turning losses into profits in 2018.

In the process of annexation of central and local state-owned enterprises, there are indeed some obstacles, but we should also see the strength and influence of restructuring enterprises, as well as the consideration of local governments. As the announcement of Maanshan Iron and Steel Co. shows, for the reorganization of Maanshan Iron and Steel Group, the merger will drive Maanshan Iron and Steel to achieve leapfrog development, strengthen the state-owned economy of Anhui Province, promote the development of iron and steel and related industries, promote the transformation and upgrading of the industrial structure of Anhui Province, and achieve higher quality development.

Economic Observation Network: What kind of enlightenment and influence will the merger and reorganization of Chinas iron and steel industry bring about by the combination of Baowu and Maanshan Iron and Steel Group?

Wang Guoqing: As early as September 2016, the State Council issued the general target set in document 46, which mainly aims at the merger and reorganization of the iron and steel industry. By 2025, 60-70% of the output of Chinas iron and steel industry will be concentrated in about 10 large groups, including 3-4 iron and steel groups of 80 million tons and 6-8 iron and steel groups of 40 million tons. At present, the merger and reorganization of iron and steel industry will be more concentrated because of the promotion of national policy and the needs of enterprises own development. Every enterprise wants to make an early layout in which line of the industry it stands in. At present, many large enterprises in the industry have been gradually expanding on the road of merger and reorganization, and constantly adopt strategies and measures to meet their own development needs, gather superior iron and steel production capacity, and further enhance the development strength and competitiveness of enterprises. Source: Responsible Editor of Economic Observation Network: Liu Song_NBJ9949