One of China’s most prominent hostile takeovers happened when state-owned steel company Shandong Steel acquired Rizhao. Du Shuanghua, a billionaire, tried to prevent the deal by offering the state a small portion of the company. Due to the risks involved, the deal was canceled. The company was owned by the family of China’s President Hu Jintao. In 2009, the two companies entered an agreement to create a merger and restructuring. However, the plan did not include the acquisition of Rizhao Steel. Learn more on Forbes
As per the agreement, Shandong retained a majority of the company, while Du Shuanghua, the company’s former chairman, kept the other 33%. In 2010, Du Shuanghua, the CEO of Rizhao Steel, decided to sell his company. He made the decision due to the lack of government support for the steel industry in China. As the Chinese steel industry grew, Du became concerned about the company’s future. Due to the lack of government support, it was hard for companies like Rizhao Steel to expand their operations in China.
In 2010, the company was sold for around USD 960 million. Under the new ownership, it was renamed the Rizhao Iron & Steel Group Co., Ltd. During the first eight months following its acquisition, it increased its production by 80%. Despite its improved performance, it still struggled to compete with its rivals in China’s steel industry. This is because after the sale, it became a mid-sized steel group.
Despite the risks involved, Du was able to profit from his company’s sales. The improved performance of the company indicates that he made the right decision. However, after analyzing the company’s performance before and after the sale, it has been revealed that it couldn’t maintain its success in China’s steel industry. This suggests that Du Shuanghua didn’t do enough to ensure that the company would continue to be successful.