Does sustainability matter in mergers and acquisitions?: The case of the Serbian food industry

Abstract

This paper investigated key areas in which environmental, social and governance issues may be important in M&A transactions, with a particular emphasis on the Serbian food industry. The analysis was conducted using a sample of 11 realized M&As in the Republic of Serbia with the food producers as target companies and is based on the data acquired from the targets` annual reports and web sites. The analysed transactions, that have been randomly elected, belong to different legal types of M&A: acquisition of asset, acquisition of shares, tender offer and merger/consolidation. Following the classification of sustainability issues, two types of M&A in the Serbian food industry have been distinguished: one enables the acquirer to build the presence in the key segments with sustainability products in line with modern health trends, while the other helps the buyer to improve synergies and consolidate leadership position by acquiring target with a recognized sustainability profile and credibility.

Sustainability Framework for Assessment of Mergers and Acquisitions in Energy Sector

“…Denčić-Mihajlov [34] Corporate consolidation transactions or assets consolidation trough different types of financial transactions.…”

“…Denčić-Mihajlov [34] proposes that incorporating sustainability in the M&A processes could release the potential sustainability value and reduce the possible faults, subsequently resulting in better strategic investment decisions. Elaborating on Denčić-Mihajlov [34], Figure 2 introduces a framework for assessing environmental, social and governance issues during M&A processes: target company selection, due diligence process, deal valuation and post-acquisition integration. Xie et al [35] analyzed how CEOs' foreign experience affect cross-border M&A sustainability and investigated how the externally acquired knowledge may be applied to cross-border M&A practice.…”

“…Further, by incorporating sustainability issues into the valuation process the acquiring company has the capacity not only to reflect direct impacts (e.g., cost savings caused by energy efficiency, profit growth of sustainable products), but also indirect effects (e.g., improved reputation, employee engagement, customer loyalty, etc.). According to Denčić-Mihajlov [34], sustainability may impact two M&A types. On the one side, M&A enable the acquiring company to build their presence in key areas with sustainability products.…”

More or Less Sustainable? Assessment from a Policy Perspective

“…They provide the overall line with the general sustainability concept, directed towards the proper balance between the three core pillars. Commonly, the focus is placed on those issues concerning the proper use of natural resources, while recognizing solid institutional capacities for sustainable tourism development [66][67][68]. Many additional plans and projects further address the process of development of tourist destinations of Serbia (like regional plans, tourist destination master plans, and municipal development plans).…”