Profiles of Targets and Acquirers: Empirical Evidence from European Banking System - Case of Cross-Border M&A Strategies by Line of Activities

Abstract:     
During these last decades, the European banking system witnessed deep changes. They were manifest in operations of Merger and Acquisition (M&A). The available studies prove that the rate of failure of theses M&A is relatively high. The cross-border operations are more exposed at this risk. The reasons of failure are due to the cultural and contextual differences between the actors, making the process of integration particularly difficult. Thus, the success of M&A is tributary with the choice of the adequate targets. It constitutes the main challenge which the leaders must take up. The aim of this paper is thus to determine the factors which make possible to identify targets and buyers. Our contribution compared to former works is that we study M&A and the identification of targets and buyers by line of bank’s activities. On the basis of sample made up of 1054 European banks between 2000 and 2006, and M&A operation released between 2000 and 2006, we estimate a Logit Multinomial Model. Our main results show that that the probability of fusion increases with size. The rigidity of the regulatory environment promotes profile "buyer". Banks with this profile, approaching the model of universal banking, try to consolidate abroad their core business of intermediation.

Number of Pages in PDF File: 27

Keywords: Cross-Border M&A, Probability, Profile, Bank, Activity, Multinomial Logit

JEL Classification: C35, G21, G24, G34

working papers series