Cross-border acquisitions in Central and Eastern Europe with focus on Russia versus Germany deals: an empirical analysis
Abstract
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.
Full text
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DOI: 10.15240/ ul/001/2018-4-014
In oduc ion
C oss-bo de me ge s and acquisi ions (M&As)
ha e gained popula i y o e he las wo
decades (E el, Liao, & Weisbach, 2012). They
ha e become a dominan o m o o eign di ec
in es men in wo ld economy (Zhu, 2011).
Resea ch on his ype o expansion s a egy,
howe e , has no kep pace wi h his end and
i is highly agmen ed, lea ing gaps ha need
o be add essed (Collins e al., 2009). The a ea
o c oss-bo de acquisi ions in Cen al and
Eas e n Eu ope, which is also o in e es in his
pape , ep esen s such a gap.
The p og ess o globaliza ion posi i ely
in l uenced he wo ldwide acquisi ion and
me ging ac i i ies o companies. Howe e , he e
a e some ac s and ends in he wo ld economy
ha highligh he impo ance and speci i ci y o
M&As in Cen al and Eas e n Eu ope. These
ac s and ends hang especially wi h he
de elopmen a e 1993, when a as numbe
o me ge s we e ollowed by an unp eceden ed
inc ease o wo ldwide ansac ions. To some
ex en , his de elopmen was caused by
changes o he poli ical landscape in Eu ope
and he ela ionships among Eu opean
coun ies. Because o all o he “i on cu ain”,
he p oceeds o Eu opean in eg a ion, mainly
he Eu opean single ma ke , ha e c ea ed
new possibili ies. As a esul , companies ha e
been o ced o de elop and implemen new
expansion s a egies. Mo i a ed by he p omise
o alue c ea ion o hei sha eholde s,
mul ina ional co po a ions ha e begun o use
c oss-bo de M&As as an impo an ool o
acqui e key esou ces and gain ma ke en y o
Cen al and Eas e n Eu opean ma ke s (Zhu,
2011; Ga u o á, Vagašo á, & Ko áč, 2016).
As unde s anding he p oblem and
oppo uni ies o c oss-bo de acquisi ions in
Cen al and Eas e n Eu ope is he essen ial
elemen in unde s anding he na u e o he up-
o-da e global expansion s a egy o a company
om an eme ging ma ke connec ed o he
EU, he main aim o his pape is o analyze
announced and comple ed c oss-bo de
acquisi ions be ween a public lis ed acqui e
and a ge companies om Cen al and Eas e n
Eu ope concen a ing on he associa ed
eac ions o he capi al ma ke s. The empi ical
analysis ocuses on companies om Russia
and Ge many as dominan acqui e s in his
con ex (S a is a, 2018).
Taking in o accoun he abo e, ollowing
hypo heses a e es ed in his pape :
Hypo hesis 1: Capi al ma ke belie es ha
he e ec s o he in es men s ealized in he
o m o c oss-bo de acquisi ions in Cen al and
Eas e n Eu opean ma ke s a e posi i e.
Hypo hesis 2: Russian ma ke is be e
in he a ea o c oss-bo de acquisi ions han
emaining Cen al and Eas e n Eu opean
ma ke s.
Analysis esul s indica e ha Cen al and
Eas e n Eu ope a e e y a ac i e om ma ke ’s
pe spec i e due o he expec ed g ow h a es
and he amewo k condi ions as well as om he
pe spec i e o Wes e n Eu opean in es o s, and
ha he Russian ma ke is be e in he a ea o
c oss-bo de acquisi ions han emaining Cen al
and Eas e n Eu opean ma ke s. Analysis esul s
also show ha e ec s o in es men s ealized
in o m o c oss-bo de acquisi ions in Cen al
and Eas e n Eu ope a e posi i e, and changes
in s ock p ices a e s a is ically signi i can . These
i ndings p o ide some suppo o he syne gis ic
and in es men oppo uni y a gumen s o M&As
in eme ging ma ke s asse ed by Cha i, Ouime ,
and Tesa (2004).
CROSS-BORDER ACQUISITIONS
IN CENTRAL AND EASTERN EUROPE
WITH FOCUS ON RUSSIA VERSUS
GERMANY DEALS: AN EMPIRICAL ANALYSIS
Tim Langens ein, Anna Voj ko á, Ma in Užík, And eas Ruepp
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The emainde o his pape p oceeds as
ollows. Sec ion 1 p o ides he e iew o ele an
li e a u e. Sec ion 2 explains he main mo i es
o c oss-bo de M&As in Cen al and Eas e n
Eu ope. Sec ion 3 desc ibes he sample and
he esea ch me hodology. Sec ion 4 p esen s
he esul s, and Sec ion 5 summa izes and
concludes i all.
1. Li e a u e Re iew
The p og ess o globaliza ion (Hi e al.,
1998; Hi , Kea s, & DeMa ie, 1998), ela ed
inc eased economic in eg a ion (Bjo a n,
2004) and libe aliza ion o in e na ional ade
(Hijzen, Gö o, & Manchin, 2008), oge he
wi h accele a ed de elopmen o echnology
(Conklin, 2005) posi i ely in l uenced he
wo ldwide acquisi ion and me ging ac i i ies
o companies. As a consequence o business
en i onmen ans o ma ion, i ms equi ed
new esou ces and al e na i es o s a egic
expansion and s eng hening hei own
compe i i eness, and M&As seemed o be
a ela i ely l exible (Rani, Yaday, & Jain, 2016),
as (Vasconcellos & Kish, 1998) and i nancially
a ac i e (Conklin, 2005) esponse o his need
(see also Moelle , Schlingemann, & S ulz,
2004; Nadolska & Ba kema, 2007). No he ac
ha M&As a e one o he la ges and iskies
capi al budge ing p ojec s ha companies
unde ake has impeded he global g ow h o
in e es in M&As. The p oo o his is he ise
in o al ansac ion alue in M&As om abou
$151 billion in 1990 o mo e han $721 billion in
2016 (UNCTAD, 2000; 2016), and he a ionale
o his may be a ibu ed in pa o a di e ence
in companies’ mo i es o ealizing such a deal
(Boubak i, Chan, & Kooli, 2012).
Deals belonging o M&As began o appea
mo e p onounced as a back as in he ea ly 20 h
cen u y in he U.S., whe e a la ge numbe o
smalle companies began o join he so-called
us s in o de o gain a compe i i e ad an age in
a apidly consolida ing global ma ke (Spodniak
& Cesnak, 2010). Subsequen ly, since 1993
(Shimizu e al., 2004), a as numbe o M&As
was ollowed by an unp eceden ed inc ease o
wo ldwide ansac ions (Moschie i & Campa,
2014). As a esul , M&As oday a e no longe
he domain o jus U.S. companies (No bu n &
Schoenebe g, 1994).
To some ex en , he g ow h o popula i y o
M&As ou side he U.S. ma ke was caused by
changes o poli ical landscape in Eu ope and
he ela ionships be ween Eu opean coun ies
(Calo i & Luba kin, 1995). Because o he all
o he “i on cu ain”, he p oceeds o Eu opean
in eg a ion, mainly he Eu opean single ma ke ,
ha e c ea ed new possibili ies (Bjo a n, 2004).
Thus, in he 1980s, c oss-bo de M&As seemed
pa icula ly a ac i e o companies wan ing
o become a pa o single Eu opean ma ke .
While, howe e , be o e emaining na ional
ba ie s came down, he main mo i e o hese
deals was a g owing conce n ha uni i ed
Eu ope could ans o m in o a p o ec ionis
Fo ess Eu ope, la e he e we e wo pa icula
easons o M&As o EU i ms. Fi s ly, he e
was a need o comple e he es uc u ing
ha had begun in he 1980s which could no
be done by companies om he EU membe
coun ies alone, and, secondly, he e we e
some egula o y changes ha enabled hos ile
akeo e s o occu mo e easily (Angwin & Sa ill,
1997; Vasconcellos & Kish, 1998). Acquisi ion
and me ging ac i i ies in he EU subsided jus
in he la e 1980s, when, as s a ed by Rugman
and Ve beke (1991), he s eps ha we e being
aken o b ing Eu ope oge he eally c ea ed
a na u al ba ie o en y o ou side s.
Bjo a n (2004) and Moschie i, Ragozzino,
and Campa (2014) also conside he p ocess
o egional in eg a ion expe ienced by he EU
as a signi i can ac o a ec ing he g ow h
s a egies o companies wo ldwide. They a gue
ha de elopmen o he EU has c ea ed a mo e
l uid en i onmen o i ms seeking in e na ional
g ow h ia M&As, despi e he di e ences ha
con inue o exis ac oss he EU membe s.
Ongoing business en i onmen ans o ma ion
in he EU, namely pu s p essu e on i ms
o es uc u e bo h in e nally and ex e nally,
and accompanied de egula ion aises many
incen i es o unde ake c oss-bo de M&As in
his egion o Eu ope (see also Wes on, Chung,
& Hoang, 1998; Rossi & Volpin, 2004; Rao &
Reddy, 2015).
Thus, in he cou se o ime, mo i a ed by he
p omise o alue c ea ion o hei sha eholde s,
mul ina ional co po a ions ha e begun o use
c oss-bo de M&As as an impo an ool o
acqui e key esou ces and gain ma ke en y o
Cen al and Eas e n Eu opean ma ke s (Zhu,
2011). The si ua ion has mainly a isen as he
coun ies o Cen al and Eas e n Eu ope began
o loosen high ba ie s and es ic ions on
o eign pa icipa ion in he ea ly 1990s (Conklin,
2005). The indus ial de elopmen o many
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Cen al and Eas e n Eu opean economies, hei
apid economic g ow h (DePamphilis, 2015;
Ga u o á, Vagašo á, & Ko áč, 2016), and hei
deepening connec ion o he EU (G igo ie a &
Pe unina, 2015) ha e also been a powe ul
d i e o his de elopmen .
The need o ocus on M&As in Cen al and
Eas e n Eu ope is suppo ed also due he ac
ha one o he main esul s o globaliza ion is
a g ea e ole o eme ging ma ke s in he wo ld
economy (see also Boubak i, Chan, & Kooli,
2012; Ma ko ić, Raki a, & Filipo ić, 2016).
Cha i, Chen, & Dominquez (2012) also s a e
ha while o eign in es men has adi ionally
l owed om de eloped o de eloping coun ies,
in ecen yea s he e has been an in e se end.
One o he sho comings o he ex an M&A
li e a u e is jus he ela i e ina en ion o c oss-
bo de M&As in and ou o eme ging economies,
esp. in and ou o Cen al and Eas e n
Eu opean ma ke s. In con as o me ge s and
acquisi ions in de eloped coun ies, which ha e
been analyzed by a la ge numbe o s udies (e.g.
Conn & Connell, 1990; Chen & Su, 1997; Hi e
al., 1998; And ade, Mi chell, & S a o d, 2001;
Se h, Song, & Pe i , 2002; Aw & Cha e jee,
2004; Campa & He nando, 2004; Goe gen
& Renneboog, 2004; Cha i, Quime , & Tesa ,
2004a,b; Kiymaz, 2004; Lowinski, Schie eck, &
Thomas, 2004; Shimizu e al., 2004; O che e
& Ip, 2006; Benou, Gleason, & Madu a, 2007;
Collins e al., 2009; Rabbiosi, Elia, & Be oni,
2012), only a ew s udies ocus on M&As in and
ou o eme ging ma ke s (e.g. Cha i, Ouime , &
Tesa , 2004; Pop, 2006; Aulakh, 2007; Nagano
& Yuan, 2007; B is & Cabolis, 2008; G aham,
Ma ey, & Yawson, 2008; T ojanowski, 2008;
Pablo, 2009; G ego ic & Vesp o, 2009; Gubbi
e al., 2010; Bhaga , Malho a, & Zhu, 2011;
Peng, 2012, Young e al., 2014; Lebede e
al., 2015; Ma ko ić, Raki a, & Filipo ić, 2016).
Cen al and Eas e n Eu ope a e analyzed e.g.
by Uhlenb uck and De Cas o (2000), Meye
(2003), Lanine and Vande Venne (2007),
Bedna czyk e al. (2010), B ou he s and Diko a
(2010) and Poghosyan and de Haan (2010),
and he Russian acquisi ion and me ging
ac i i ies a e he main objec o in e es e.g. by
Robe s, Thompson, and Mikolajczyk (2008),
Bhaga , Malho a, and Zhu (2011), Be and
and Be schinge (2012) and Rabbiosi, Elia, and
Be oni (2012).
This pape is closely ela ed o Sha ma
and Raa (2016) who ocus on he s ock
ma ke eac ion o c oss-bo de acquisi ion
announcemen s ha in ol e Eas e n Eu opean
eme ging-ma ke a ge s. Using a da ase
consis ing o 125 deals in which i ms om
Ge many, F ance, Ne he lands, and he Uni ed
Kingdom acqui e owne ship s akes in eme ging
as well as de eloped-ma ke s in Eu ope du ing
he pe iod 1 Janua y 2000 h ough 31 Decembe
2011, he au ho s s a e ha when he a ge i m
is loca ed in ei he he Czech Republic, Poland,
Hunga y, o Russia, cumula i e abno mal e u n
o he acqui ing de eloped-ma ke company
shows s a is ically signi i can inc ease o 1.26%
o e a h ee day e en window, ollowing he
announcemen .
2. Mo i es o C oss-Bo de
Acquisi ions in Cen al
and Eas e n Eu ope
The acquisi ion p ocess is a dynamic one
(Geo gopoulos, A gy os, & Bou a, 2008). I
ep esen s one o he la ges and iskies capi al
budge ing p ojec s ha en e p ises unde ake
(Boubak i, Chan, & Kooli, 2012; Alexand ou,
Gounopoulos, & Thomas, 2014). Nume ous
au ho s he e o e examine he incen i es o
companies o M&As (e.g. Meye , 2011).
Acco ding o Sha ma and Raa (2016), he
mo i a ions behind c oss-bo de M&As appea
o a y widely, depending on he indi idual
company, he espec i e indus y, he cu en
economic en i onmen , and on o he a ious
in l uencing ac o s. DePamphilis (2015) s a e
ha he d i e s o c oss-bo de M&As a e
la gely simila o hose o domes ic M&As, and
Ho n and Pe sson (2001), gi e a ac as he
main ad an age o a c oss-bo de acquisi ion
ha i p o ides access o o eign ma ke , while
a domes ic acquisi ion educes he compe i i e
p essu e in he domes ic ma ke (see also
Bjo a n, 2004). Due o hei in e na ional
na u e, howe e , he e a e some speci i c
ac o s which d i e his c oss-bo de deals,
such as a ou able egula o y en i onmen and
mo e s able poli ical backg ound in he hos
coun y, exchange a es, low o eign ax a es
and be e clien base in he o eign economy
(see Fig. 1). Cul u al, geog aphic, and coun y-
le el go e nance di e ences a e also impo an
mo i es o a c oss-bo de ansac ion (Sol es &
Ga u o a, 2014). The same goes o di e ences
in esou ces and echnologies a ailable in he
hos coun y. Moelle , Schlingemann, and S ulz
(2004) and Boubak i, Chan, and Kooli (2012)
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conside ha he main mo i e o a c oss-
bo de acquisi ion is he alue c ea ion o
companies’ sha eholde s ha usually comes in
he o m o isk educ ion, syne gy e ec s and
he acquisi ion o unde alued asse s.
In o he wo ds, M&As p o ide unique
oppo uni ies o he acqui e o gain new
capabili ies which an en e p ise migh
o he wise i nd di i cul o de elop on i s own,
o g ow apidly, and o gain access o new
ma ke s (Degbey & Hasse , 2016). Zhu, Jog,
and O che e (2014) also gi e s a egic ma ke
en y hypo hesis as he majo mo i a ion o
c oss bo de M&As. They unde s and M&As as
a apid way o en e ing a new ma ke in a new
coun y, and hey no e ha acqui e en e s he
ma ke c oss bo de by acqui ing an al eady
es ablished i m. In his way, he acqui e can
ake ad an age o dis ibu ion channels, an
es ablished b and name, a quali i ed labou
o ce, managemen expe ience and local
knowledge. C oss-bo de acquisi ions gi e
acqui ing i ms access o esou ces ha may
no be a ailable in hei home economy, and
he eby, hey enhance hei capabili ies o be
compe i i e (Rani, Yaday, & Jain, 2016).
Nea y (2007) iews c oss-bo de
M&As as being mo i a ed by ma ke powe
conside a ions, and Guadalupe, Kuzmina, and
Thomas (2012) s a e ha he c oss-bo de
M&As a e ini ia ed in pa icula by he ma ching
o complemen a y asse s be ween domes ic
and mul ina ional companies. Las bu no leas ,
some esea che s no e ha M&As may educe
ope a ing cos s and ansac ion cos s, imp o e
e i ciency, and enhance he managemen o
esou ce dependency. O he s a gue ha M&As
a e d i en p ima ily by managemen sel -
in e es (Sande s, 2001).
Cen al and Eas e n Eu opean ma ke s a e
p ima ily in e es ing as hey o e high p o i
ma gins due o – in e alia – low wage le els
and inexpensi e p oduc ion cos (see Eu os a ,
2016). Fu he mo e, he e a e pa ly e y good
condi ions o in es men o be ound especially
in new EU-coun ies. Eu opean enla gemen
and in eg a ion has sp ead he ule o law and
cons i u ional democ acy in his egion. This
se up has led o poli ical s abili y and b ough
economic success. F om 2005 o 2014 he
g oss domes ic p oduc a ma ke p ices in
Cen al and Eas e n Eu ope g ew om 6,910
EUR o 11,909 EUR (Eu os a , 2016).
Fig. 1: Mo i es o c oss-bo de me ge s and acquisi ions
Sou ce: own acco ding o Lebede e al. (2015), Rani, Yaday, & Jain (2016) and Sha ma & Raa (2016)
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In pa icula , wo mo i es a e o g ea
impo ance in he con ex o c oss-bo de
acquisi ions be ween Cen al and Eas e n
Eu opean and Russian, esp. Ge man
companies. One o cou se a e syne gy e ec s,
o ins ance in he o m o po en ial cos sa ing,
pu chase o expe ise and ex ensions in he
alue chain. The o he main mo i e is ma ke
d i en: gaining ma ke sha es and acqui ing
new p oduc s as well as o e coming o ma ke
en y ba ie s. I is all abou e aining o winning
a compe i i e ad an age.
The deepening o Eu opean single ma ke
and Eu opean Union’s enla gemen owa ds
Cen al and Eas e n Eu ope imp o ed he
acquisi ion condi ions o companies in ha
pa o Eu ope. Cen al and Eas e n Eu opean
ma ke s a e p ima ily in e es ing as hey o e
high p o i ma gins due o – in e alia – low
wage le els and inexpensi e p oduc ion
cos (see Eu os a , 2016). I is no su p ise
ha bo h s a egic and ins i u ional in es o s
i nd such ci cums ances wo h conside ing.
Fu he mo e, he e a e pa ly e y good
condi ions o in es men o be ound especially
in new EU-coun ies. Eu opean enla gemen
and in eg a ion has sp ead he ule o law and
cons i u ional democ acy in his egion. This
se up has led o poli ical s abili y and b ough
economic success. F om 2005 o 2014 he
g oss domes ic p oduc a ma ke p ices in
Cen al and Eas e n Eu ope g ew om 6,910
EUR o 11,909 EUR (Eu os a , 2016).
3. Da a and Me hodology
3.1 Da a
In p esen empi ical analysis, all announced
akeo e s by a Cen al o Eas e n Eu opean
company in he pe iod om 1 Janua y 1990 o
30 June 2014 a e examined. The ime ame
e l ec s undamen al changes in he o e all
en i onmen as men ioned ea lie , and co e s
ecen global i nancial and economic c isis and
Eu opean so e eign deb c isis, i.e. he ime
ame ha ew ha e s udied. Due o he limi ed
scope o his pape , howe e , he mo e de ailed
analysis o he sample and e ec s associa ed
wi h he c isis is no pa o he p esen ed
empi ical analysis.
The ini ial sample in ol es 11,085 deals.
The i nal sample ela es only o ansac ions
wi h Russian and Ge man companies. The
sample consis s o 150 ansac ions. The da a
o igina e om bo h he me ge s and acquisi ions
da abase by Bloombe g (Da a om 15 Ma ch
2005 o 30 June 2014) and he me ge s and
acquisi ions da abase by Thomson Financials
(Da a om 1 Janua y 1990 o 15 Ma ch
2005). The limi a ions o he analysis esul ing
om a s uc u al b eak in he da a a e aken
in o accoun when in e p e ing esul s. The
s a is ical analysis was ca ied ou using he
so wa e SPSS.
The ou comes o p ima y analysis o he
c oss-bo de akeo e s in Cen al and Eas e n
Eu ope in sec ion 4.1 a e ollowed by he s a is ical
analysis o capi al ma ke ’s eac ions in he
a e ma h o an announced c oss-bo de akeo e
o a Russian company by a Ge man company and
ice e sa in sec ion 4.2. The pape ocuses on
22 Cen al and Eas e n Eu opean a ge coun ies
(Albania, Bosnia and He zego ina, Bula ia,
Ge man Democ a ic Republic – un il 1990,
Es onia, Yugosla ia, C oa ia, La ia, Li huania,
Macedonia, Poland, Romania, Russia, Se bia,
Slo ak Republic, Slo enia, Czech Republic,
Czechoslo akia – un il 1993, Hunga y, Uk aine,
Bela us) a ec ed by c oss-bo de acquisi ions by
ei he Russian o Ge man companies.
3.2 Me hodology
The esea ch me hodology is based on
de e mina ion o he expec ed e e ence a e o
e u n and on calcula ion o he excess e u ns
which we e made in he ollowing way.
1) De e mina ion o expec ed e e ence
a e o e u n
In o de o de e mine abno mal excess e u ns,
he e e ence a e o e u n is calcula ed
acco ding o a ma ke model. The ma ke model
is based on Ma kowi z (1959) and assumes
a linea cohe ence be ween he e u n om
comme cial pape s and ma ke po olio.
i mii i RR ,,,
(1)
whe e Ri, is he e u n on secu i y i a day
; αi, βi a e pa ame e s; εi, is noise; and Rm, is
he e u n on he ma ke a day .
Alpha and be a pa ame e s a e de e mined
wi h he OLS me hod in he con ex o his s udy.
The es ima ion pe iod ends one day p io o
beginning o he e en pe iod in o de o a oid
any o e lapping. Cen al wi hin he obse a ion
is he day o he announcemen . The e en
pe iod comp ises 20 days a ound he day o
he announcemen . As he es ima ion pe iod
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o he de e mina ion o he ma ke model’s
pa ame e s, a pe iod o 748 o 20 days p io o
he e en pe iod is used ( o gene al ema ks
on he ma ke model and he de e mina ion
o he leng h o es ima ion pe iod see Wul
(2001, p. 116). This pe iod co e s 728 ading
days. The S oxx-EURO 600 Index is used o
de e mine he e u n o he ma ke po olio.
2) Calcula ion o he excess e u ns
The di e ence be ween e ec i ely ealized
and heo e ically an icipa ed e u n o a sha e
exp esses he excess e u n. In he in o ma ion-
e i cien ma ke and unde he condi ion o he
concu en alidi y o he model consul ed in
o de o de e mine he expec ed e u n, he e
do no exis sys ema ic de ia ions o he wo
e u n i gu es.
E(ARi, ) = 0 (2)
whe eby he excess e u n is calcula ed as
ollows:
ARi, = Ri, – E(Ri, ) (3)
whe e ARi, is he abno mal e u n o he sha e
i a day , Ri, is obse ed e u n o he sha e
i a he s ock exchange a day , and E(Ri, ) is
expec ed e u n o he sha e i a day .
In li e a u e, he addi i e as well as he
mul iplica i e conjunc ion o he excess e u ns
and he de e mina ion o buy-and-hold excess
e u ns a e used o de e mine cumula ed
excess e u ns. Empi ical s udies mainly use
he addi i e de e mina ion p ocedu e ( o he
calcula ion o cumula i e excess e u ns see
Mi chell and S a o d (2000)).
The addi i e app oach o de e mina ion o
cumula ed excess e u ns aces back o he
wo k o Fama e al. (1969) and is de e mined
as ollows:
ARi,
L
Li
AR
CAR
,, (4)
The mul iplica i e conjunc ion o he excess
e u ns was p oduced by Ball and B own
(1968). The esul o a cumula ed mul iplica i e
comp ession o excess e u ns is cap u ed
in an abno mal-pe o mance-index (API). In
he p esen s udy i is eso ed o he addi i e
cap u e o he cumula ed excess a es (see
Wul (2001, p. 134)).
4. Resul s and Discussion
o Findings
4.1 C oss-Bo de Acquisi ions
in Cen al and Eas e n Eu ope
The con empla ion o he pa icula ans e ees
by hei company’s domicile shows ha mos o
he announcemen s o an Cen al o Eas e n
Eu opean c oss-bo de ansac ion we e s a ed
by a company ha has i s egis e ed o i ce in
Cen al o Eas e n Eu ope ( hese en e p ises
a e summa ized in “Cen al and Eas e n
Eu ope“ ca ego y). Howe e , his su p ising ac
can be explained by he de i ni ional dis inc ion
o a c oss-bo de acquisi ion by Thomson
Financial. Acco ding o Thomson Financial,
a M&A ansac ion by a ans e ee ha has
i s egis e ed o i ce in he Cen al o Eas e n
Eu opean ma ke , he acquisi ion a ge , is
de i ned as a c oss-bo de ansac ion in case
he ans e ee’s pa en company has i s head
o i ce ou side o ha ma ke .
Tab. 1 shows M&A dis ibu ion acco ding
o geog aphical a ea o bo h he acqui ing and
he a ge i m. 44.5% o all ope a ions we e
announced by i ms om he Uni ed Kingdom.
I we lea e Cen al and Eas e n Eu ope
c oss-bo de acquisi ions ou o conside a ion
hen US companies a e he mos common
ans e ees wi h 1,208 announced c oss-bo de
acquisi ions, ollowed by Ge man companies
wi h 998 announcemen s in Cen al and
Eas e n Eu ope.
Economic de elopmen o he espec i e
Cen al and Eas e n Eu opean coun ies, as
well as he geog aphical p oximi y o Wes e n
Eu opean coun ies seem like he essen ial
c i e ia in he decision making p ocess.
Companies om Poland, Czech Republic,
Slo akia, Hunga y and Russia a e included in
almos 63% o he announcemen s, which a e
all – excep Russia – close o Wes e n Eu ope.
Fu he mo e, Ge man ans e ees p e e an
acquisi ion a ge om one o hese coun ies in
76% o all cases. Mo eo e , as can be seen om
he i gu e, mos o he announced ansac ions
wi h 2,289 acquisi ion a ge s came om Russia,
ollowed by Poland wi h 1,881 and Czech
Republic wi h 1,374 acquisi ion in en ions.
Rega ding he companies ha a e
summa ized in he o e all ca ego y „Cen al
and Eas e n Eu ope“, i becomes appa en
ha mos o he announcemen s we e made
be ween companies in he same egion.
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Acqui e
Na ion
Ta ge Na ion
Sum
Albania
Bosnia and
He zego ina
Bulga ia
GDR (un il 1990)
Es onia
Geo gia
Yugosla ia
C oa ia
La ia
Li huania
Macedonia
Molda ia
Poland
Romania
Russia
Se bia
Slo ak Republic
Slo enia
Czech Republic
Czechoslo akia
(un il 1993)
Hunga y
Uk aine
Bela us
A gen ina 11 2
Bahamas 11 11 1 14
Belgium 2 15 1 2 4 2 40 9 15 4 9 6 39 16 20 3 1 188
Be mudas 2 6 1 1 2 1 2 6 1 2 2 26
B azil 1 1 1 2 1 1 7
Cayman Island 3 1 1 1 6
Chile 2 2 4
Denma k 6 12 4 10 31 1 58 4 12 2 6 5 21 8 15 2 197
Ge many 3 2 29 25 14 1 5 28 13 16 5 4 249 30 67 5 35 21 197 46 188 15 998
Finland 120 1 1 39 37 43 3 62 8 3 14 7 16 1 355
F ance 15 2 5 3 7 2 1 1 159 38 51 3 19 14 85 35 108 8 1 557
G eece 4 33 1172 122 7398 9 4 113 152
I eland 6 1 2 3 21 1 13 4 4 8 4 67
Iceland 2 1 3 3 1 1 1 3 15
I aly 1 2 13 6 4 15 5 3 1 35 31 13 4 14 10 31 9 38 3 1 239
Japan 3 1 1 1 12 5 8 1 7 1 10 8 58
Canada 3 2 3 1 1 24 9 56 1 5 6 25 9 18 6 169
Liech ens ein 1 1 1 2 2 1 1 9
Luxembou g 4 2 1 3 23 5 12 6 2 6 2 1 67
Mal a 13 1 5
Ne he lands 2 1 20 81388 6 11032634 1757526873 1435
No way 1 2 26 1 1 10 15 26 9 27 6 7 15 4 8 6 164
Aus ia 1 7 27 6 2 4 29 1 2 1 56 31 10 2 50 22 103 24 117 7 5 507
Panama 1 1
Po ugal 17 1 2 2 22
Swi ze land 17 41242 121341635361638222319 246
Spain 4 1 1 2 3 32 4 11 7 2 8 2 77
Sweden 3 5 67 1 7 32 33 82 8 56 1 5 7 33 8 16 10 1 375
Tu key 4 11 1 1 1 1 3 13 3 2 2 42
UK 5 4 36 2 11 10 3 21 15 12 4 4 140 42 192 4 21 30 135 31 85 44 6 857
USA 1 32 1 25 10 3 12 13 16 2 4 241 83 218 6 28 66 176 70 161 33 7 1,208
Venezuela 111 3
Cyp us 15 1 1 7 19 39 1 1 6 3 2 12 107
„Cen al and
Eas e n Eu ope“ 1 25 94 97 17 20 78 78 88 18 15 462 103 1,338 29 81 512 330 108 242 146 24 3,906
Sum 22 47 393 30 414 55 60 233 238 275 58 35 1 881 533 2,289 75 317 732 1,374 434 1,202 340 48
Sou ce: own
Tab. 1: Geog aphical assignmen o he acqui e and he acquisi ion a ge s
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214 2018, XXI, 4
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In app oxima ely 1,260 cases, he ans e ees
om Russia chose an acquisi ion a ge om
Russia (see Tab. 2). In o al, mos o he c oss-
bo de acquisi ions had i s a ge in Russia
(1,338). Russia also ea u es he companies
wi h majo i y o acquisi ion ambi ions.
4.2 Russia e sus Ge many Deals
The analysis o he capi al ma ke ’s eac ions
o he announcemen o a c oss-bo de
acquisi ion in Cen al and Eas e n Eu ope is
ocused only on Russian and Ge man public
lis ed companies.
In 206 cases, Ge man companies lis ed on
he s ock exchange announced c oss-bo de
acquisi ions o a Russian a ge o Russian
companies lis ed on he s ock exchange
announced c oss-bo de acquisi ions o
a Ge man a ge . This sample ma ks he basis
o he p esen s udy. Ou o he ansac ions,
only 56 cases do no deli e su icien da a
o empi ical analysis. The examina ion
o capi al ma ke ’s eac ions is made in
a ime ame o 20 days a ound he day o
announcemen . The examina ion ocus is on
he excess e u n ha is de e mined by he
Acqui e
Na ion
Ta ge Na ion
Sum
Albania
Bosnia and
He zego ina
Bulga ia
GDR (un il 1990)
Es onia
Geo gia
Yugosla ia
C oa ia
La ia
Li huania
Macedonia
Molda ia
Poland
Romania
Russia
Se bia
Slo ak Republic
Slo enia
Czech Republic
Czechoslo akia
(un il 1993)
Hunga y
Uk aine
Bela us
Albania 1 1
Bosnia-
He zego ina 31 4
Bulga ia 49 2 3 1 4 1 2 1 2 1 66
GDR* (un il 1990) 0
Es onia 65 30 25 13 1 1 3 138
Geo gia 6 3 9
Yugosla ia 1 1 1 1 4
C oa ia 7 5 33 1 3 11134 3 62
La ia 15 23 10 4 1 53
Li huania 1 4 10 19 3 2 1 4 2 46
Macedonia 2 2 4
Molda ia 1 1
Poland 1 4 2 12 417 7 10 2 10 2 10 10 2 489
Romania 1 1 56 1 1 1 61
Russia 1 18 9 6 1 7 11 19 3 13 7 11 1,260 4 4 16 8 12 72 17 1,499
Se bia 2 1 10 1 14
Slo ak Republic 1 1 1 1 2 26 6 27 1 3 4 73
Slo enia 9 8 22 7 3 1 2 10 7 494 2 2 567
Czech Republic 12 3 1 2 14 3 7 25 1 228 89 5 1 391
Czechoslo akia
(un il 1993) 116242 34
Hunga y 1 11 13 1 1 1 13 22 8 2 8 1 16 5 207 6 316
Uk aine 1 2 2 3 19 6 3 38 74
Bela us 0
Sum 1 25 94 0 97 17 20 78 78 88 18 15 462 103 1,338 29 81 512 330 108 242 146 24
Sou ce: own
No e: * Ge man Democ a ic Republic
Tab. 2: Geog aphical assignmen o he ans e ees and he acquisi ion a ge s wi hin
“Cen al and Eas e n Eu ope” g oup
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di e ence be ween he an icipa ed and he
ealized e u n.
The analysis o abno mal excess e u ns
(see Fig. 2, up) shows no signi i can de l ec ion
o e u ns a any day in he e en pe iod.
The e o e, he analysis o cumula ed abno mal
excess e u ns mus be discussed.
The obse a ion o cumula ed excess
e u ns (see Fig. 2, down) shows a posi i e
signal on capi al ma ke s wi h espec o
announcemen s o c oss-bo de akeo e s. In
he examina ion pe iod o 20 days a ound he
momen o announcemen , he o e all e u n
o 3% could ha e been ealized. Howe e , he
alue is s a is ically no signi i can . On a sa e y
le el o 90%, he e u n o 1.57% could ha e
been no ed in a ime ame o i e days a ound
he day o announcemen .
The analysis o capi al ma ke ’s eac ion
(see Tab. 3) shows ha he capi al ma ke
alues he c oss-bo de in es men be ween
Russian and Ge man companies posi i ely.
Howe e , i should be no ed ha i ndings
gained a e exclusi ely based on he capi al
ma ke ’s expec a ions and he conduc ed
s udies co e a sho ime pe iod. In his sense,
we canno deduce gene al s a emen s abou
he ac ual long- e m success o company
akeo e s in Ge man o Russian ma ke . The
esul s, howe e , indica e ha capi al ma ke
Fig. 2: Abno mal and cumula ed abno mal e u ns in c oss-bo de acquisi ions
Sou ce: own
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222 2018, XXI, 4
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Ing. Tim Langens ein
Technical Uni e si y o Kosice
Facul y o Economics
Slo akia
[email p o ec ed]
Ing. Anna Voj ko á, PhD.
Be lin Ins i u e o Finance, Inno a ion
and Digi aliza ion
Ge many
anna. oj ko a@bi i d.sk
P o . D . Ma in Užík
Be lin School o Economics and Law
Be lin Ins i u e o Finance, Inno a ion
and Digi aliza ion
Ge many
[email p o ec ed]
And eas Ruepp LLM
Be lin Ins i u e o Finance, Inno a ion
and Digi aliza ion
Ge many
and eas. uepp@bi i d.o g
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Finance
Abs ac
CROSS-BORDER ACQUISITIONS IN CENTRAL AND EASTERN EUROPE WITH
FOCUS ON RUSSIA VERSUS GERMANY DEALS: AN EMPIRICAL ANALYSIS
Tim Langens ein, Anna Voj ko á, Ma in Užík, And eas Ruepp
Globaliza ion, de egula ion and he a endan libe aliza ion o capi al ma ke s ha e made c oss
bo de me ge s and acquisi ions a ac i e o i ms seeking o s a egically posi ion hemsel es
wi hin he global economy o ake ad an age o he oppo uni ies ha globaliza ion o e s. As
a esul , c oss-bo de acquisi ion and me ging ac i i ies ha e inc eased d ama ically o e he
ecen decades. Because o he all o he “i on cu ain” and he p oceeds o Eu opean in eg a ion,
mainly he Eu opean single ma ke has c ea ed new possibili ies. Mo eo e , one o he main esul s
o globaliza ion is a g ea e ole o eme ging ma ke s in he global economy, especially in he a ea
o o eign di ec in es men . The pape he e o e analyses announced and comple ed c oss bo de
acquisi ions be ween a public lis ed acqui e and a ge companies om Cen al and Eas e n Eu ope
and associa ed eac ions o he capi al ma ke s. The analysis ocuses, in pa icula , on c oss-bo de
Russia e sus Ge many deals. Examining he sample o 11,085 announced deals o e he pe iod
om Janua y 1990 h ough Decembe 2014, he analysis poin s ou some impo an ends in he
global economy in he a ea o companies acquisi ion and me ging ac i i ies. In summa y, i can
be emphasized ha Cen al and Eas e n Eu ope as he egion is e y a ac i e om he ma ke ’s
pe spec i e due o he expec ed g ow h a es and he amewo k condi ions as well as om he
pe spec i e o Wes e n Eu opean in es o s. Analysis esul s indica e ha Russian ma ke is be e
in he a ea o c oss-bo de acquisi ions han emaining Cen al and Eas e n Eu opean ma ke s. I
allows us o sugges ha i is wo hie in es ing in Russia han in emaining Cen al and Eas e n
Eu ope.
Key Wo ds: C oss bo de acquisi ions, abno mal e u n, Cen al and Eas e n Eu ope.
JEL Classi i ca ion: C39, C49, F65, P45.
DOI: 10.15240/ ul/001/2018-4-014
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