Cross-border acquisitions in the global food sector

Herger, Nils; Kotsogiannis, Christos; McCorriston, Steve

doi:10.1093/erae/jbn033

Cited by 31 publications

(23 citation statements)

References 35 publications

(41 reference statements)

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“…To overcome these shortcomings, we use information on Mergers and Acquisitions (M&A) as a proxy for FDI. While this is a limitation of our analysis, we believe that it is unlikely to affect the qualitative results, because cross-border M&A are by and large the most widely used mode of operating a foreign firm (Herger et al 2008). Data on M&A are sourced from SDC Platinum Global mergers and acquisitions, a database provided by Thomson financial securities data that records all deals involving a change in ownership of at least 5% of total equity and exceeding 1 million US dollar.…”

Section: Dependent Variablementioning

confidence: 99%

Internationalization choices: an ordered probit analysis at industry level

2015

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Trade theory traces back different patterns of internationalization to heterogeneity between firms, measured both through differences in productivity levels and size. In this paper we analyze the link between heterogeneity within sectors and internationalization choices, namely trade and foreign direct investments (FDI) for a large sample of countries and industries between 1994 and 2004. The focus of our paper is on the role played by average productivity level and the distribution of firms by size in explaining differences across sectors and countries in the extensive margin of internationalization (i.e., the number of foreign nations where firms from a given sector and country have expanded abroad). By performing an ordered probit analysis, and controlling for other factors affecting the patterns of internationalization, we confirm that industries with higher productivity levels and with a distribution of firms shifted toward large firms are more prone to internationalize in foreign markets through both trade and FDI. Moreover, the relative impact of average productivity and firm size on FDI is larger than that on trade. These results are robust to different measures of productivity and the distribution of firms.

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Section: Dependent Variablementioning

confidence: 99%

Internationalization choices: an ordered probit analysis at industry level

2015

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“…Bhuyan, 2002). While historic merger waves occurred in the food sector during the 1980s (Connor and Geithman, 1988) smaller waves also occurred during the period of analysis in the present study (Herger et al, 2008). Between 1997 and 2004 the US food industry was ranked number one globally regarding the number of food sector M&As (Herger et al, 2008).…”

Section: Us and Eu Datasetmentioning

confidence: 53%

“…While historic merger waves occurred in the food sector during the 1980s (Connor and Geithman, ) smaller waves also occurred during the period of analysis in the present study (Herger et al ., ). Between 1997 and 2004 the US food industry was ranked number one globally regarding the number of food sector M&As (Herger et al ., ). Similarly, Kastrinaki and Stoneman () show that between 1983 and 2007 the EU food industry has accounted for around 20 per cent of all EU merger activity.…”

Section: Us and Eu Food Processing Industry Population And Samplementioning

confidence: 97%

“…Similarly, Kastrinaki and Stoneman (2011) show that between 1983 and 2007 the EU food industry has accounted for around 20 per cent of all EU merger activity. Moreover, Kastrinaki and Stoneman (2011) reveal common international patterns of food industry M&A activity while Herger et al (2008) point towards a high share of cross boarder acquisitions in the US and EU food industry. Although, our data does not contain the information necessary to quantify the effect of M&As on profitability those findings indicate that both sectors were similarly affected by M&A activity during the analyzed period.…”

Section: Us and Eu Datasetmentioning

confidence: 99%

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What Drives Firm Profitability? A Comparison of the US and EU Food Processing Industry

Gschwandtner¹,

Hirsch

2017

The Manchester School

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Non-technical summaryThe present project analyses what drives profitability in the food sector and compares the results with the manufacturing industry in general but also between the European Union and the United States.One of the main findings is that competition is stronger and profitability is lower within the food sector as compared with the manufacturing sector in general. This is mainly attributable to a high market saturation and to the fierce competition between the big retail companies. While the competition profits the consumer, it puts strong bargaining pressure on the producers. Therefore, one of the main drivers of profitability and profit persistence within the food sector is firm size. Larger producers seem to be in a better bargaining position against the retail sector and this seems to be both the case in the EU and in the US.A determinant where the food sector seems to differ between the two regions is firm's growth. While the impact of firm's growth on profitability is positive in the US, it is insignificant in the EU. This may be because while growing firms have to take into consideration higher costs and this may decrease profitability.And this may explain yet another difference between the determinants of profitability in the food sector in the US and in the EU. While the impact of (long-term) debt is positive in the US, it is negative in the EU. By having easier access to debt, US firms are presumably able to better counteract this potentially negative effect of growth. Long-term debt can enable firms to make the necessary investments that help to ensure competitiveness in times of crisis. In the EU firms indebted in the long run seem to find it more difficult to cope with risk.The results have not only purely descriptive value but can also be useful when designing policies aimed at supporting food sector firms or the food sector as a whole. This is important as today firms are facing economic circumstances characterized by reduced entry barriers and possibilities to operate in previously hardly accessible foreign markets. Those developments are a consequence of intensified globalization represented by trade agreements such as the NAFTA or the formation of a single market for goods and services within the EU. However, these deregulations of borders and international trade have led to a significant intensification of competition among firms across many sectors. Pressure on the margins and competitiveness ...

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“…2 SDC Platinum reports the standard industry classification (SIC) codes of the acquiring and target, denoted here by, respectively, SIC α and SIC τ , which provides the basis to identify the horizontal and vertical linkages between the merging firms. 3 In particular, in case SIC α = SIC τ , a deal occurs between firms sharing the same industry-a characteristic 2 SDC Platinum data has been used elsewhere in Rossi and Volpin (2004), Di Giovanni (2005), Kessing, Konrad, andKotsogiannis (2007), Herger, Kotsogiannis, andMcCorriston (2008), Hijzen, Görg, and Manchin (2008), Coeurdacier, De Santis, and Aviat (2009), Erel, Liao, and Weisbach (2012, and Garfinkel and Hankins (2011) to study various aspects of CBAs.…”

Section: Distinguishing Horizontal Vertical and Conglomerate Cbasmentioning

confidence: 99%

Horizontal, Vertical, and Conglomerate Cross-Border Acquisitions

Herger¹,

McCorriston²

2016

IMF Econ Rev

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Using data on cross-border acquisitions (CBAs), this paper explores the distribution of alternative strategies pursued when multinational enterprises integrate foreign subsidiaries 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, a considerable part of CBAs are conglomerate acquisitions whereby the financial sector is an important, though by far not the only, segment involved. Third, the wave-like growth of CBAs arises primarily from changes in conglomerate activity. [JEL F15, F21, F23, F33] IMF Economic Review (2016) 64, 319-353.

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Cross-border acquisitions in the global food sector

Cited by 31 publications

References 35 publications

Internationalization choices: an ordered probit analysis at industry level

Internationalization choices: an ordered probit analysis at industry level

What Drives Firm Profitability? A Comparison of the US and EU Food Processing Industry

Horizontal, Vertical, and Conglomerate Cross-Border Acquisitions

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