Understanding multiple mergers and acquisitions’ completion or abandonment by serial acquirers: analysis from institutional and organizational learning perspectives

Abstract

Mergers and Acquisitions (M&As) have gained in popularity over the last few decades and are one of the most widely researched topics in finance. BCG (2011) reports that of all M&As, multiple acquirers constitute almost a quarter of all M&As and most larger acquisitions are also undertaken by serial acquirers. However, Thomson Financial Merger & Acquisition database (2017) shows that announced M&As worth US$5.3 trillion were abandoned, accounting for 14% of the total worldwide value of announced acquisitions, between 2006 and 2016. Thomson Financial Merger & Acquisition database (2017) reports that 11,374 multiple acquisitions conducted by 355 serial acquirers were abandoned between 2006 and 2016. This raises a serious question regarding what factors influence serial acquirers to continually withdraw multiple acquisitions. Based on institutional theory, in Chapter 3, we discuss the pre-acquisition stage by using a sample containing 7,751 announced cross-border M&As — comprising both completed and abandoned deals—by serial acquirers in the global market between 2006 and 2016. We investigate whether the host country’s institutional environment influences the decision of serial acquirers to terminate subsequent cross-border M&A deals in the pre-acquisition stage. The findings suggest that multiple cross-border M&A transactions are more likely to be abandoned in target countries where there is a more complex institutional environment. The findings discussed in Chapter 3 provide strong evidence and understanding of a large number of multiple cross-border M&A deals abandoned by serial acquirers from institutional perspective. In Chapter 4, based on the organisational learning theory, we examine how acquisition frequency patterns influence the likelihood of domestic and cross-border acquisitions made by serial acquirers from the Asia-Pacific to be abandoned. We find that acquisition rate and time interval negatively impact on the multiple acquisitions withdrawn. The findings of Chapter 4 contributed to an improved understanding of the role of acquisition rate and time interval which explained why serial acquirers from Asia-Pacific continually terminate their acquisitions.