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Baoshan Iron & Steel Co Ltd: Crafting a three-way cross-border, cross-shareholding alliance

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documents in English
term papers
3 pages
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  1. Introduction
  2. Strategic position of Baosteel and motives for negotiating a three-way cross-border, cross-shareholding agreement
  3. Possible alternatives to this cross-shareholding alliance that Baosteel should have considered
  4. The risks to each company in the alliance
  5. Possibiliy of a three-way merger
  6. Conclusion
  7. Bibliography

Baosteel is the most modern and profitable steel maker in China. The Chinese giant is, however, in a critical situation: From one side, Baosteel is facing a need for capital to achieve its projects. From the other, the Chinese market became more attractive since China's entry to WTO because China lowered its tariffs and eased import regulations (especially in high-quality products) making the competition harder. This threat is growing considering the transnational announced alliances which would create the two biggest steel making groups. So Baosteel, approached POSCO and NSC for a three-way cross border, cross-shareholding alliance to satisfy its need for capital and thwart the threat of competition by securing its market share, sharing the risks and achieving cost-savings.

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