Strategic Deals in Emerging Capital Markets (eBook)

Series Editors´ Preface 6
Preface 8
Acknowledgments 12
Contents 14
Part I: Strategic Deals and Value Creation: The Lessons from Previous Research 16
MandAs Trends in Emerging Capital Markets 17
1 Introduction 17
2 MandAs in China: Trends and Evidence 18
2.1 The MandAs Market in China 18
2.2 MandAs Waves in China 18
2.3 What Is Typical for Current MandAs in China? 21
2.4 Domestic and Cross-Border MandA Deals in China 22
3 MandAs in India: Trends and Evidence 25
3.1 The MandAs Market in India 25
3.2 Domestic MandA Activity 26
4 MandAs in Brazil 31
4.1 The MandA Market in Brazil 31
5 The MandA Market in Russia 35
5.1 MandAs Market in Russia 35
5.2 MandAs Waves in Russia 37
5.3 What Is Typical for the MandAs Market in Russia? 38
5.4 Domestic and Cross-Border Deals in Russia 40
6 Conclusion 42
References 43
How MandA Deals Influence Corporate Performance in Developed and Emerging Capital Markets: A Review of Empirical Results in th... 46
1 Introduction 46
2 Stock Market Reactions to the Announcements of MandA Deals in Developed and Emerging Capital Markets 48
2.1 Evidence from Developed Capital Markets 49
2.2 Evidence from Emerging Capital Markets 50
3 Long-Term Operating Performance of MandA Deals in Developed and Emerging Capital Markets 53
4 Long-Term Value Performance of MandA Deals in Developed and Emerging Capital Markets 55
5 Relationship Between Different Methods in Measurement of MandA Deals Performance 58
6 Conclusion 61
Appendix 1. Returns to Acquiring Shareholders in Developed Markets in the Short Run 62
Appendix 2. Long-Term Operating Performance of MandA Deals in Developed and Emerging Capital Markets 65
References 69
Determinants of Cross-Border MandAs and Shareholder Wealth Effects in a Globalized World 75
1 Introduction 75
2 Determinants of Cross-Border MandAs 77
3 Determinants of MandAs Value Creation for Shareholders 85
4 Conclusions 88
References 89
Meta-analysis of MandAs Studies in Emerging Markets 93
1 Introduction 94
2 Literature Review 95
2.1 Economic Explanation 95
2.2 Trends in MandAs Deals 96
2.3 Determinants of MandAs Performance 97
2.3.1 Method of Payment 97
2.3.2 The Size of Acquirer 97
2.3.3 Deal Size 99
2.3.4 Cross-Border Deals 99
2.3.5 Private Target 99
2.3.6 ROE 99
2.3.7 Industry Relatedness 99
2.3.8 SOE 100
2.3.9 ROA 100
2.3.10 Financial Leverage 100
2.4 Meta-analyses of MandAs Performance 101
3 Sample 102
4 The Methodology 102
5 Results of the Meta-analysis 109
5.1 Method of Payment 110
5.2 The Size of Acquirer 112
5.3 Deal Size 114
5.4 Cross-Border Deal Dummy 114
5.5 Public Target Company Dummy 115
5.6 ROE 115
5.7 Industry Relatedness 116
5.8 SOE 116
5.9 ROA 117
5.10 Financial Leverage 117
6 Conclusion 118
References 119
Part II: Strategic Deals and Value Effects: New Empirical Evidence 122
Post-acquisition Value Effects of MandA Deals: A Comparative Analysis in Developed and Emerging Capital Markets 123
1 Introduction 124
2 Literature Review and Hypotheses Development 125
3 Methodology and Data 130
3.1 Performance Measures 130
3.2 Sample Characteristics 132
4 Results and Discussion 133
4.1 Value Effects of MandA Deals in Developed and Emerging Capital Markets 133
4.2 Determinants of Value Effects of MandA Deals in Developed and Emerging Capital Markets 134
5 Concluding Remarks 137
Appendix 1 139
Appendix 2 140
Appendix 3 141
References 141
What Drives the Control Premium? Evidence from BRIC Countries 146
1 Introduction 146
2 Premiums in MandA Deals: Results in Empirical Studies in Developed and Emerging Markets 147
2.1 The Methods to Study the Size of Premiums 147
2.1.1 Deal Approaches 147
2.1.2 Dual-Class Stock Method 149
2.1.3 Block Transactions 150
2.2 The Determinants for Premiums 151
2.2.1 Acquirer Characteristics 151
2.2.2 The Target Characteristics 152
2.2.3 Deal Type 153
2.2.4 Country/Residence 154
3 The Hypotheses 154
4 The Model and the Variables 155
5 The Sample 158
6 Results and Discussion 160
6.1 MandA Premium Estimation Results 160
6.1.1 Results for the Whole Sample 160
6.1.2 Results for the Country Subsamples 161
6.1.3 Results for Different Threshold Levels of the Acquired Stake 161
6.2 The Determinants of the Size of Premium 164
6.2.1 Identifying the Factors Which Influence the Size of the Control Premium (Whole Sample) 164
6.2.2 Identifying the Factors Which Influence the Size of the Control Premium by Countries 166
7 Conclusions 167
References 167
Success Factors in MandAs of Knowledge-Intensive Firms in Brazil: Evidence from Consulting Engineering Companies 170
1 Introduction 171
2 Critical Success Factors (CSFs) 171
2.1 Concepts 171
2.2 General CSF Considerations 172
3 Ordinal Ranking Methods 175
3.1 Borda Method 175
3.2 Condorcet Method 176
4 Consulting Engineering 177
4.1 Introduction 177
4.2 Main Features 177
4.3 Current Situation 179
5 Research Methodology 181
5.1 Framework 181
5.2 Research Sample and Operationalization 182
6 Practical Application 183
6.1 Introduction 183
6.2 Analysis of the Results 185
7 Final Considerations 193
References 194
Domestic MandAs in Russia: Performance and Success Factors 197
1 Introduction 197
2 Derivation of Hypotheses for Russian Companies 198
2.1 Operating Synergies 198
2.2 Financial Synergies 200
2.3 Synergy Success Factors 201
3 Hypotheses 201
4 Methodology 204
4.1 Economies of Scale 204
4.2 Market Power 205
4.3 Tax Benefits 205
4.4 Investment Opportunities 206
4.5 Debt Capacity 207
5 Sample 209
6 Synergy Valuation 209
7 Analysis of Synergy Structure 213
8 Synergy Success Factors 214
8.1 Economies of Scale 214
8.2 Market Power 215
8.3 Tax Benefits 216
8.4 Investment Opportunities 217
8.5 Debt Capacity 218
9 Application of the Methodology to the Major Domestic Russian Deals 220
9.1 MMK and Belon Group (October 2009) 220
9.2 Megafon and Scartel (October 2013) 222
9.3 Independent Petroleum Company and Alliance Oil (April 2014) 222
9.4 Mail.ru and VKontakte (September 2014) 223
10 Conclusion 225
References 225
Translation of References in Russian into English 228
Part III: Diversification Strategies via MandAs: New Evidence from BRIC 229
Corporate Diversification-Performance Puzzle in BRIC 230
1 Introduction 231
2 Literature Review 232
3 Methodology 235
3.1 Announcement-Period Abnormal Stock Return 235
3.2 Construction of Vertical Measures 236
4 Sample Characteristics 237
5 Empirical Findings and Results 240
6 Conclusion 243
References 244
Corporate International Diversification and Performance: An Economic Profit Viewpoint-Evidence from BRIC Companies 247
1 Introduction 247
2 Theoretical Background and Hypotheses 248
2.1 Research Approach 248
2.1.1 Choice of DOI Measures 249
2.1.2 The Choice of Performance Indicators 250
2.1.3 The Impact over Required Rates of Return 251
2.1.4 Prior Results 252
2.1.5 Side Factors 253
2.2 Hypotheses 254
2.2.1 Performance Indicator-DOI Relationship 255
2.2.2 The Choice of DOI Measure 256
2.2.3 The Impact of Internationalization in the Long Run and the Short Run 256
2.2.4 The Impact of Product Diversification 257
3 Methods 257
3.1 The Sample 257
3.2 The Model 258
4 Findings 262
4.1 Multi-country Models 262
4.1.1 The Performance-DOI Pattern for BRIC Firms 263
4.1.2 The Choice of DOI Measure 265
4.1.3 The Impact of International Diversification in Short Run and Long Run 266
4.1.4 The Impact of Product Diversification 267
4.2 The Results for Single-Country Models 267
5 Conclusion 268
Appendix 1. Estimation of S-Shaped Curve Pattern 270
Appendix 2. Diebold-Mariano Test for Predicting Better Forecasting Power of DOI Measures 270
References 272
Conclusion: MandAs in Emerging Markets-The Lessons Learned 275