M&A: Dutch buyers are falling out of love with the US
Laatst gewijzigd: 20 juli 2023 10:26
Uit data van de Rijksuniversiteit Groningen blijkt dat Nederlandse kopers sinds 1985 drastisch minder acquisities doen in de grootste economie van de wereld, de Verenigde Staten. Onderzoekers Killian J McCarthy en Magdalena Langosch doen ook een paar suggesties over de oorzaken hiervan.
Door Killian J McCarthy en Magdalena Langosch
What have Dutch acquirers been doing in the worlds largest market?
To consider this question, we built a dataset of 16,422 acquisitions by Dutch dealmakers in the time period of 1985 to the end of 2015. Zooming in on the 840 deals involving target firms in the US – a surprisingly low number – we find some interesting developments in the Netherlands evolving relationship with the US.
Firstly, and looking at the development of the absolute numbers, we see that its been a quite a rocky relationship. In the 1980s and 90s, the US was – sometimes more sometimes less – the favoured target destination for the Dutch acquirers. The dot-com bubble, in 2000, however, collapsed Dutch transatlantic investment. Low interest rates and the weak dollar in the years after brought the Dutch back, but the Financial Crisis in 2008 reduced Dutch interest in the US once more. Since then, its been a case of ‘once bitten twice shy’, and Dutch investment in the US has remained slow.
Figure 2 confirms this, and shows that the US has become dramatically less interesting to Dutch acquirers since the mid-80s. In 1985, 39 per cent of Dutch acquisitions were aimed at the US, but since the 1990s as little as 5 per cent of all Dutch deals cross the Atlantic. Figure 3 shows that, in the same period, the Dutch found a new love over time, closer to the dealmakers and easier to access. Figure 3 shows the development of shares of EU firms on the total amount of acquisitions over the same three decades, indicating much higher shares than for the old love, ranging up to 80 per cent and more showing a major focus for the Dutch on the EU market.
So what happened to this once promising relationship? The turbulence of the US market is one explanation, and the discovery of the European market is another.
Our data suggests a third. We looked at the ‘Percentage Sought’ – that is the percentage of the target firm that the Dutch firm was looking to acquire – in Dutch acquisitions of targets, and we noticed some interesting differences in how the Dutch deal with US targets. Broadly speaking, the data suggests that 71 per cent of Dutch deals in general, and 81 per cent of Dutch acquisitions in the US, in particular, are for 100 per cent of the target firm. Plotting the trends over time, we find that Dutch preferences have not changed, when it comes to non-US international acquisitions, but that they have changed significantly when it comes to US acquisitions, with the Dutch preferring to buying more and more of their target firms over time. So what does this mean?
Increasing the percentage acquired, of course, might be explained by a number of financial, legal or strategic possibilities. It may, however, also indicate that Dutch deal makers have been running into problems with American firms in terms of culture, and have been acquiring an even higher share of their American targets, to diminish the voice of the target firm’s American shareholders.
More research, of course, needs to be done, but from these figures, it appears that the Dutch have fallen out of love with the US, at least in terms of acquisitions.
Dr. Killian J McCarthy is an Assistant Professor in the Economics of Strategy at the University of Groningen, and the Director of the Masters Program Strategic Innovation Management. He completed his PhD thesis in 2011, for his study of the performance of 35,000 international mergers and acquisitions from Asia, Europe and North America.
Magdalena Langosch is Research Assistant at the University of Groningen and a Master student at the Rotterdam School of Management. She obtained her Bachelor degree in International Business from the University of Groningen. Her research interests focus on cross-cultural Management, post-acquisition integration and Knowledge Management.