Cross-Border Mergers: Experiences from Poland

Abstract

The article provides a theoretical and empirical study of cross-border mergers under the legal framework available in Poland following the implementation of the 2005 European Directive on Cross-Border mergers (CBMD). We begin with the assessment of how the CBMD has been implemented into Polish company law and how it fits into a general framework for domestic mergers. We then turn to presenting empirical data cross-border merger activity involving companies incorporated in Poland. The dataset embraces 126 transactions, whereby generally the publication of draft mergers terms counted as relevant for the inclusion into the cohort. Thus, what distinguishes this analysis is a focus not only on quantitative aspects but foremost on qualitative analysis of merger transactions. The results show a sharp increase in the number of cross-border mergers in the last three years. There is also an absolute prevalence of intra-group transactions. As regards the migration’s direction the study reveals a balanced ratio of inbound vs outbound mergers. When it comes to foreign jurisdictions involved we demonstrate that Polish companies merge with entities incorporated in Cyprus or Luxembourg in more than half of the total number of transactions, which suggests a fiscal nature of the considerations underlying the operation. The article argues that there is a need to amend Polish rules on cross-border mergers in order to adjust them to the market expectations and demands.

Keywords: cross-border mergers, restructurings, (former) 10th company law directive, Polish company law, European company law, empirical studies of company law

JEL Classification: K22