DETERMINANTI ED EFFETTI DELLE FUSIONI E ACQUISIZIONI: UN’ANALISI SULLA BASE DELLE NOTIFICHE ALLE AUTORITA’ ANTITRUST
[DETERMINANTS AND EFFECTS OF MERGERS AND ACQUISITIONS: AN ANALYSIS BASED ON THE NOTIFICATIONS TO ANTITRUST AUTHORITIES]

Luigi Benfratello
(Ceris-Cnr, Turin and University of Rome "Tor Vergata")

December 1999

Abstract

Using the Italian and European Union competition authorities databases over the 1991-1994 period, this paper analyses the ownership reallocation process in Italy, in terms of the characteristics of acquired firms and the effects of ownership changes.

Our results show that acquired firms’ financial and profitability characteristics in the years before the acquisition are, accordingly with previous literature, worse than the control sample, and that their performance deteriorates as long as the change in ownership approaches. As far as the effects of acquisitions are concerned, the impact is negative, even if not significantly, in the short-run as well as four years after the acquisition.

A subsequent stratification of the sample allows a separate analysis for three groups of particular operations: privatised firms are only slightly worse than control sample before the acquisition and the performance improvement occurs mainly before and only slightly after the acquisition; independent firms acquired by foreign multinationals do not differ from the control sample before the acquisition, while their performance clearly worsen after the change in ownership; firms acquired through leveraged and management buyouts perform better than the control sample before the acquisition. These results are consistent with most industrial organization literature, except for firms acquired by foreign multinationals.

Key words: Mergers and Acquisitions, privatization, leveraged and management buyout, foreign acquisitions.
JEL Classification: G34, L40, L33.