CROSS-BORDER ACQUISITIONS IN CENTRAL AND EASTERN EUROPE WITH FOCUS ON RUSSIA VERSUS GERMANY DEALS: AN EMPIRICAL ANALYSIS
Cross-border mergers and acquisitions (M&As) have gained popularity over the last two decades (Erel, Liao, & Weisbach, 2012). They have become a dominant form of foreign direct investment in world economy (Zhu, 2011). Research on this type of expansion strategy, however, has not kept pace with this trend and it is highly fragmented, leaving gaps that need to be addressed (Collins et al., 2009). The area of cross-border acquisitions in Central and Eastern Europe, which is also of interest in this paper, represents such a gap.
Cross border acquisitions, abnormal return, Central and Eastern Europe
DOI (& full text):
Globalization, deregulation and the attendant liberalization of capital markets have made cross border mergers and acquisitions attractive to firms seeking to strategically position themselves within…více
Globalization, deregulation and the attendant liberalization of capital markets have made cross border mergers and acquisitions attractive to firms seeking to strategically position themselves within the global economy to take advantage of the opportunities that globalization offers. As a result, cross-border acquisition and merging activities have increased dramatically over the recent decades. Because of the fall of the “iron curtain” and the proceeds of European integration, mainly the European single market has created new possibilities. Moreover, one of the main results of globalization is a greater role of emerging markets in the global economy, especially in the area of foreign direct investment. The paper therefore analyses announced and completed cross border acquisitions between a public listed acquirer and target companies from Central and Eastern Europe and associated reactions of the capital markets. The analysis focuses, in particular, on cross-border Russia versus Germany deals. Examining the sample of 11,085 announced deals over the period from January 1990 through December 2014, the analysis points out some important trends in the global economy in the area of companies acquisition and merging activities. In summary, it can be emphasized that Central and Eastern Europe as the region is very attractive from the market’s perspective due to the expected growth rates and the framework conditions as well as from the perspective of Western European investors. Analysis results indicate that Russian market is better in the area of cross-border acquisitions than remaining Central and Eastern European markets. It allows us to suggest that it is worthier investing in Russia than in remaining Central and Eastern Europe.