Horizontal, Vertical, and Conglomerate Cross Border Acquisitions
Paper number: 14/02
Paper date: February, 2014
Paper Category: Discussion Paper
Nils Herger and Steve McCorriston
By using data on cross-border acquisitions (CBAs), this paper explores the distribution of the strategies pursued when multinational enterprises integrate a foreign subsidiary into their organizational structure. Based on a measure of vertical relatedness, each of the 165,000 acquisitions in our sample covering 31 source and 58 host countries can be classified as horizontal, vertical, or conglomerate. Three novel features of CBAs are highlighted. First, horizontal and vertical CBAs are relatively stable over time. Second, substantial parts of CBAs involve conglomerate acquisitions. Third, the wave-like growth of CBAs arises primarily from changes in conglomerate activity, which responds to international valuation differences between financial markets.
JEL classification: F15, F21, F23, F33
Keywords: Cross-Border Acquisitions, Multinational Firm, Horizontal Merger, Vertical Merger, Conglomerate Merger