An Analysis of Short-Term Performance of UK Cross-Border Mergers and Acquisitions by Chinese Listed Companies

Abstract

Using a unique and proprietary database of Chinese cross-border mergers and acquisitions into the UK from 2012 to early 2016, this paper investigates the short-term performance of UK cross-border mergers and acquisitions acquired by Chinese publicly-listed companies. Using event study analysis with four different time-period windows, the results show that Chinese acquirers have earned significantly positive abnormal returns on the first day following the announcement date of M&A deals, however, these positive returns faded away over time. In addition, we conduct the event analysis by sector subsamples. The findings suggest that Chinese acquirers in Real Estate and other business sector deals have gained positive abnormal returns, while those in the Financial sector had negative abnormal returns. Regarding the factors that drive stock performance, the paper takes five of the most related deal characteristics into consideration both in univariate analysis and regression analysis. The results indicate that target form (public/private) and absolute transaction size are the most influential factors on the short-term performance of these Chinese acquiring firms: acquirers engaged in deals where the target firms are UK private and small/medium-sized earn statistically significant higher abnormal returns than those UK public and large-sized targets.

Changing Share Price after Announcement of the Merger and Acquisitions by Acquiring Firms Is Significant or Insignificant?

“…The United Kingdom is the most popular country among all the European countries to Chinese companies to do business as the easiest most important economy. As a result, UK was in first place in 2014 among the top ten European target countries followed by France and Germany for cross-border merger and acquisition according to agreement worth (Zhu & Moeller, 2016). It was conveyed that in the period of January 2019 to June 2022 almost 91 Chinese companies invest as cross-border merger and acquisition in the UK, which also demonstrations a noteworthy uphill trend for the last few years (Zhu & Moeller, 2016).…”

“…As a result, UK was in first place in 2014 among the top ten European target countries followed by France and Germany for cross-border merger and acquisition according to agreement worth (Zhu & Moeller, 2016). It was conveyed that in the period of January 2019 to June 2022 almost 91 Chinese companies invest as cross-border merger and acquisition in the UK, which also demonstrations a noteworthy uphill trend for the last few years (Zhu & Moeller, 2016). The deal worth is also notable, combined at more than $35 billion.…”