The hottest steel giant opens the curtain of indus

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On September 22, the state owned assets supervision and Administration Commission of the State Council announced that with the approval of the State Council, Baosteel Group Co., Ltd. and Wuhan Iron and steel (Group) Co., Ltd. implemented a joint reorganization to form China Baowu iron and Steel Group Co., Ltd. to jointly build a world-class platform for technological innovation, industrial investment and capital operation in the steel industry. Baosteel Group and WISCO group's listed companies Baosteel and WISCO will also implement joint restructuring through the share exchange of Baosteel and the merger of WISCO shares

On the evening of the 22nd, Baosteel Co., Ltd. and Wuhan Iron and Steel Co., Ltd. simultaneously released the absorption and merger report. Baosteel Co., Ltd. issued A-share shares to all shareholders of Wuhan Iron and Steel Co., Ltd. for share exchange to absorb and merge Wuhan Iron and Steel Co., Ltd. The merged listed company will become the third largest producer of crude steel among the global steel listed companies. Insiders said that under the new round of steel industry mergers and acquisitions aimed at reducing production capacity and improving industry concentration in this round of supply side structural reform, Baosteel and WISCO, both central enterprises, will play an exemplary role, which can be called a milestone in the development history of China's steel industry

the birth of a listed steel giant

from the group level, after the merger and reorganization of Baosteel Group and WISCO group, in accordance with the development principles of high-end, intelligent, green and service-oriented, Baosteel Group will implement a business combination of strong main steel industry and coordinated related industries, focus on the refinement, strength and excellence of main steel industry, lead the transformation and upgrading of demonstration industries, and comprehensively enhance its global influence, Strengthen the comprehensive support of relevant industries for the development of the main steel industry, and create the most competitive green and smart steel industry ecosystem. After the joint reorganization of Baosteel and WISCO, the strategic goal is to become the most competitive steel enterprise in the world and the listed company with the most investment value

after the reorganization of Baosteel Group and WISCO group, synergy will be deeply explored in key products, technology research and development, sales network, business layout, procurement management, cutting and distribution, logistics system and other fields, which is conducive to optimizing resource allocation, reducing repeated investment, reducing operating costs, and promoting enterprise quality and efficiency

from the perspective of joint-stock companies, according to the report, the exchange price of Baosteel and WISCO is determined as follows: Baosteel shares 4.60 yuan/share, WISCO shares 2.58 yuan/share, based on the average stock trading price of the 20 trading days before the announcement date of the resolution of the board of directors of the listed company to consider the issue of this exchange absorption and merger, and no less than 90% of the market reference price. According to the above share exchange price, the share exchange ratio between WISCO and Baosteel is 1:0.56, that is, every share of WISCO is exchanged for 0.56 shares of Baosteel

At the same time, Baosteel will absorb and merge WISCO. All existing assets, liabilities, businesses, personnel, contracts, qualifications and all other rights and obligations of WISCO will be undertaken and inherited by WISCO. Since the closing date, 100% of the equity of WISCO will be controlled by Baosteel

once the transaction is concluded, the listed companies will greatly increase their strength after the merger, and will become the undisputed giant of the national steel industry in terms of revenue and output. At the level of listed companies, the merged listed companies will rank third in crude steel production among the global listed steel enterprises. At the group level, the production scale will exceed Hebei Iron and steel, ranking second only to European steel giant ArcelorMittal in the world

leading a new round of industrial restructuring

at present, China's steel industry is facing the contradiction of serious overcapacity and market supply exceeding demand. According to the data, the crude steel output of China's steel industry in 2015 was 804 million tons, accounting for 49.5% of the crude steel output of the global steel industry, and the capacity utilization rate was only 67%. In recent years, steel consumption has shown a decreasing trend year by year, and steel consumption will generally enter the downward channel

some people believe that the low utilization rate of production capacity and the serious imbalance between supply and demand will become the prominent problems faced by the development of China's steel industry for a long time in the future. Therefore, resolving overcapacity in the iron and steel industry has become the primary task of the iron and steel industry to extricate itself from difficulties, adjust, transform and upgrade

at the same time, China's steel industry is too fragmented, which also affects the effect of policies to resolve excess capacity. In 2015, the market share of China's top ten steel industry fell back to 34.2%, and the industrial concentration fell to the lowest point in the past decade

in March 2015, the Ministry of industry and information technology publicly solicited opinions on the "steel industry adjustment policy", and proposed to further organize the optimization and adjustment of the steel industry structure and speed up mergers and acquisitions. By 2025, the crude steel output of the top ten steel enterprises will account for no less than 60% of the country, forming 3 to 5 super large steel groups with strong competitiveness in the world. At the end of 2015, the central economic work conference proposed to focus on promoting the supply side structural reform, taking the capacity reduction as one of the five major tasks of the national economic work in 2016, and required to reduce the national crude steel production capacity by 100million to 150million tons in five years from the reason of condensation into water in 2016

it is in this context that the restructuring of the two companies will become a benchmark for the integration of the steel industry, play a demonstration role, and also be placed in higher hopes

insiders believe that the joint reorganization of the two enterprises meets the requirements of capacity reduction and industrial transformation and upgrading of the steel industry, is conducive to optimizing the industrial structure, making desert irrigation as convenient and effective as ordinary farmland irrigation, improving industrial concentration, is conducive to balancing internal production capacity, coordinating and integrating different production bases and lines, and accelerating the elimination and shutdown of a number of inefficient and ineffective production capacity. The joint reorganization of the two enterprises is also an important measure to deepen the reform of state-owned enterprises and establish and improve market-oriented systems and mechanisms, which is in line with the direction of building a state-owned capital investment company. It is conducive to promoting the concentration of resources to advantageous enterprises, strengthening business model innovation and management innovation, improving the competitiveness of enterprises, concentrating resources, developing and applying cutting-edge technologies, and further improving the technological research and development capacity of strategic products, Gradually form large iron and steel groups based on technological research and development advantages, and make contributions to improving the international competitiveness and influence of China's iron and steel industry

synergy after integration

the announcement shows that the merger of Baosteel and WISCO will optimize the resource allocation of the two steel listed companies and promote the quality and efficiency improvement of the listed companies after the merger. The two will play a synergistic effect in location, R & D, procurement, production, marketing, products, technological innovation, corporate culture and so on

at present, the production of Baosteel is mainly concentrated in Baoshan in Shanghai, Meishan in Nanjing and Dongshan in Zhanjiang, while the production of WISCO is mainly concentrated in Qingshan in Wuhan

after the merger of Baosteel and WISCO, the listed companies will comprehensively plan the layout of the four major steel production bases, comprehensively integrate the strategic location along the river in the domestic coast, systematically integrate the location advantages of the main steel industry from multiple angles, rationally divide the labor and layout the surrounding markets, orderly connect Chinese and global customers, and radiate the economic region of the 21st century Maritime Silk Road. Through the optimization of the layout of the production base, the two will adopt intensive allocation in the transportation and storage of raw materials and finished products to achieve cost reduction and efficiency increase

in terms of R & D, both Baosteel and WISCO have strong R & D resources. After the merger, listed companies will integrate R & D resources, concentrate advantageous forces, share service platforms, and improve R & D efficiency

in terms of procurement coordination, after the merger, listed companies will be able to divide carbon nanotubes into single wall and multi wall categories, benefiting from the expansion of the procurement scale of raw materials and spare parts, the optimization of logistics distribution and storage management, and the sharing of good reputation with suppliers, so as to reduce the comprehensive procurement cost of enterprises

for China's iron and steel enterprises, in addition to serious overcapacity, there are also short boards that lack competitiveness in high-end areas

in this regard, Baosteel and WISCO are at the forefront of the market in the field of high-end products, and they have strong sheet manufacturing capabilities. In addition to plate series products, Baosteel has its own advantages in steel pipes and WISCO in heavy rail and bridge structural steel

through merger and reorganization, the two can quickly transplant and integrate their respective achievements in the fields of automotive plates, silicon steel, tin (chromium) plated plates, engineering steel, high-grade thin plates and so on, rapidly improve the steel manufacturing capacity, strengthen the dominant position of their core and important strategic products, shoulder the important task of high-end product research and development, and create a full variety of steel manufacturing giant with optimized production capacity structure

in terms of marketing synergy, the merged listed entities will integrate their marketing service systems to create industry-leading leading service advantages. In terms of channel integration, the two will implement the strategy of one body and two wings through the third-party service platform eurometallurgical cloud business to build the most competitive steel service sharing ecosystem

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