Mergers/Acquisitions and Restructuring in the EU Chemical Industry: Patterns and Implications

Abstract

CHAPMAN K. and EDMOND H. (2000) Mergers/acquisitions and restructuring in the EU chemical industry: patterns and implications, Reg. Studies 34, 753-767. High levels of merger/acquisition activity, especially international transactions, have been a characteristic of the global economy since the mid - 1980s. A significant proportion of this activity has been focused on the EU where it has been stimulated by economic integration. Research into the phenomenon has been limited by data availability. Information from a Royal Society of Chemistry database is used to examine mergers/acquisitions in the European chemical industry. This is a key sector of the European economy which has accounted for a substantial proportion of mergers/ acquisitions in manufacturing. Attention is focused upon an important period of change immediately before and after the creation of the Single European Market (i.e. 1986-95). The connections between mergers/acquisitions, corporate restructuring and industry restructuring are explored together with implications for the changing geography of the EU production system. Mergers/acquisitions are both a symptom and, more importantly, a cause of accelerated change in this system as they facilitate the transformation of corporate identities. Some of the wider consequences of such transformations are addressed by exploring the geographical pattern of cross - border mergers/acquisitions in the EU chemical industry. A systematic transfer of corporate control is demonstrated as companies based in northern Europe have acquired those based in southern Europe. Reasons for this pattern are identified together with implications of post - merger/acquisition restructuring for places and, more generally, for economic and social cohesion within the EU. The need for more detailed empirical studies of corporate restructuring is stressed. CHAPMAN K. et EDMOND H. (2000) Fusions/acquisitions et restructuration de l'industrie chimique dans l'Ue: tendances et retombées, Reg. Studies 34, 753-767. Depuis le milieu des années 1980, l'économie mondiale se caractérise par de nombreuses fusions/acquisitions, surtout des opérations internationales. Encouragée par l'intégration économique, une proportion non-négligeable de ces opérations s'est focalisée sur l'Ue. La disponibilité des données limite la recherche sur ce phénomène. A partir d'une base de données provenant de l'Académie de chimie (Royal Society of Chemistry), on examine les fusions/acquisitions dans l'industrie chimique europénne. C'est un secteur-clé de l'économie européenne qui a assuré une proportion considérable des fusions/acquisitions industrielles. On attire l'attention sur une période transitoire, juste avant et après le moment où le marché unique européen arrive à échéance (à savoir, de 1986 à 1995). Les liens entre les fusions/acquisitions, la restructuration d'entreprise et la restructuration industrielle se voient examiner conjointement avec leurs retombées éventuelles sur la géographie du système de production européen en pleine évolution. Les fusions/a...

The Persistent Effect of Geographic Distance in Acquisition Target Selection

“…Other studies examined outcomes of spatial influences, including how acquisitions have lead to greater geographic concentration of economic activity (Rodriguez-Pose and Zademach, 2003), facilitated the transfer of corporate control across geographic boundaries (Chapman and Edmond, 2000), and generated social and economic tensions within local communities (Jonas, 1992). Nonetheless, economic and corporate geography research provides a limited understanding about the underlying mechanisms of the spatial evolution of firms (see Maskell, 2001), which this study helps advance.…”

Does the geographic location influence takeovers?

“…Green (1990) investigated the US market in the 1970s and 1980s and concluded that the economic centres of a country are key factors in developing the nearby areas. According to this idea, M&As contributed to the increase in corporate control for the urban agglomerations and also to a reinforcement of the existing company headquarters (Chapman & Edmond, 2000). Therefore, cities are considered to be the locations of power and control and with the help of the M&As their power will increase even more .…”

Inter-regional corporate ownership and regional autonomy: the case of Switzerland

“…Not all authors, however, share this optimistic vision. Chapman and Edmond (2000) demonstrate that the mergers and acquisitions process within the European chemical industry has led to a systematic transfer of ownership of firms from the south of the continent to northern countries. The restructuring processes that followed then produced fairly clear, negative effects (loss of jobs) on the regions of the firms acquired.…”

“…The various links between the firms cannot, therefore, be weighted according to the size of the target firm. Like the work by Chapman and Edmond (2000) on mergers/acquisitions in the EU chemical industry, the analysis will thus simply address the "events", i.e. the number of links between the companies.…”