Three essays on cross-border mergers and acquisitions.

Summary Compared to the literature on domestic M&As, the literature on cross-border Mergers & Acquisitions (CBM&A) is relatively recent. In particular, we still have very few studies on M&A between firms in developed and emerging countries. This thesis considers three questions that have been rarely addressed so far. 1) Can industrial diversification explain M&As between European and emerging market firms? 2) Does the market value industrial diversification actions more in these deals? 3) What are the preferred payment terms in such deals? At the same time, we compared these M&A transactions to those taking place in France and within the European Union. Based on 2,406 M&A deals in France, 7,628 in the European Union and 1,857 between European companies and emerging markets over the period 1992(1998)-2012, our results are the following. First, in line with what is observed in M&As between firms in developed countries but contrary to what the theoretical literature on investment in emerging markets suggests, M&As between European and emerging market firms are rather industrial specialization deals. We also find that the relationship between international diversification and industrial diversification is negative. Second, the announcement effects of CBM&A between EU countries and emerging markets result in an increase in the wealth of the shareholders of the acquiring European firms. However, compared to mergers and acquisitions made entirely within the European Union and in France, the announcement effects are much less positive. Third, financial markets undervalue European firms in mergers and acquisitions with firms from emerging countries. Our results show that acquiring firms pay less in cash in M&As with emerging market firms than with other European firms. In contrast, the premiums paid are not significantly different. Our results also suggest that managers of European firms do not play market timing when making payment decisions. This thesis has important implications for future acquirers of companies in emerging countries. Given the results over the end of our analysis period, it reveals that industry diversification in mergers and acquisitions of industrialized country firms with emerging market firms has increased in recent years, and that it has a positive impact. We believe that the results can be attributed either to the financial crisis or to a better integration of emerging markets into the global economy. It also highlights that there are clear conflicts of interest between investors and management in mergers and acquisitions between European and emerging market companies.