The spatial features of Hungarian mergers and acquisitions between 1997 and 2013

Abstract

This study aims to analyse the spatial features of Hungarian mergers and acquisitions (abbrev. M&A). 730 M&A transactions were investigated, i.e. those which required permission from the Hungarian Competition Authority. A permit is required for M&A if net sales of the companies concerned were over HUF 15 thousand million and there are a minimum two of the companies concerned whose net sales amounted to more than HUF 500 million in the previous business year. The investigation refers to a period from 1997 until the end of 2013, because one can find the relevant decisions on the homepage of the Hungarian Competition Authority only for this period.

In the analysis not only the spatial characteristics of M&A deals are examined, but also the sectoral and financial (acquired shares) features. The connection between the different features is also analysed using statistical investigations (e.g. cross-table analysis).

The study has three sections. The first part is a literature review, in which spatial characteristics of M&A are overviewed. In the second part of the study, the method applied in the examinations and the results are presented, which are then summarised. In the third part, the results are compared to the period of 1990–1997, and the M&A tendencies of neighbouring countries are described.

Hungary was a preferred acquisition target in the period examined: More than 70% of the acquirers were foreign companies. The headquarters of more than 80% of foreign acquirers can be found in a country of the European Union. The acquiring firms bought an average of 81% of the shares in the target companies. On the basis of the statistical results, the conclusion is that the spatial features (headquarters of acquirers and the regional distribution of foreign subsidiaries) had no effect on the acquired share in the target company.

An examination of the sector features showed these results. The manufacturing industry has the biggest share (24%), which is followed by the commerce and logistics sector (17%). In the manufacturing sector, most of the acquirers came from Benelux countries, Germany and Italy. Germany (30%) and France (16%) have the biggest share in the commercial sector. Austrian companies carried out the majority of M&A transactions in the finance and real estate sector. The regional distribution of M&A deals intensified the spatial inequalities in Hungary: In 71% of the cases the headquarters of investor companies can be found in Budapest, which is in the Central Hungary Region, where the German subsidiaries acquired the most target companies.

The results are representative concerning the fusions which require approval on the basis of threshold values as set by the Hungarian Competition Authority. The features of the investigated M&A transactions show similarities – both from spatial aspects (regions and the place of the headquarters of acquirer companies) and from sectoral aspects – to the features of Hungarian privatisations.