Adding Value through Cross-Border M&A: Evidence from the Netherlands

Abstract: Purpose: The aim of this thesis is to research corporate geographic diversification to determine if cross-border M&A involving Dutch acquirers and a selection of countries are value-enhancing for Dutch acquirers. Moreover we will aim to identify variables which influence value-creation in Dutch cross-border M&A. Methodology: This paper applies a deductive approach using theories and previous studies to form hypotheses for the purpose of the study. Event study and multiple linear regression analyses are used to test the hypotheses. Empirical Foundation: Cross-Border M&A between Dutch-based acquiring firms with target firms from a selection of countries were empirically studied between 01-01-1980 till 30-04-2014. Conclusion: Our findings show that cross-border acquisitions by acquirers from the Netherlands generally create value. Looking at the source of value-creation from a country level perspective, we found evidence that value is mainly created in acquisitions of targets based in Germany, United Kingdom and the United States. Furthermore we found positive value creation for acquisitions of targets based in North America and Western Europe. Our results are in line with an existing study on Dutch cross-border acquisitions which found evidence of value creation in acquisitions of target firms from North America and Western Europe. Determinants found to influence value-creation were relative deal size and the legal status of the target firm (public vs. non-public). We did not find significant evidence for other determinants examined in this study.