International Management: Cross Border Mergers and Acquisitions Report

This report provides a comprehensive overview of cross-border mergers and acquisitions (M&A) within the context of international management. It begins with definitions and discusses the circumstances under which multinational enterprises (MNEs) utilize M&A, highlighting the impact of globalization, technological changes, regulatory adjustments, and capital market shifts. The report then presents case studies of both successful and unsuccessful M&A deals, including the Jet Etihad-Air Asia deal and the HDFC-Max Life merger, offering insights into the factors contributing to their outcomes. It identifies and analyzes the key reasons for success, such as globalization and market pressures, and failure, including geographic scope and differing business policies. The report concludes with recommendations for effective M&A strategies in the global business environment.

Running head: INTERNATIONAL MANAGEMENT
International Management
Name of the Student
Name of the University
Author’s Note:

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Executive Summary
The objective of this report is to understand about cross border mergers and acquisitions or
M&A within the most effective manner. M&A could be referred to as the consolidation of
different organizations. Mergers are the combinations of two and more organizations for
forming into one and acquisitions is any one organization that is being undertaken over by
another company. This M&A are depicted as an important aspect of the entire corporate
finance world. M&A could easily take place during the purchase of common shares,
exchanging of asset shares, exchanging shares for stocks as well as the acquisition of
different assets. Mergers could even be categorised into 3 kinds according to the economic
perspectives based on business amalgamations. This report has adequately described the
importance of M&A in the overseas expansion of MNEs after discussing different
circumstances with case studies and suitable reasons.

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Table of Contents
Executive Summary...................................................................................................................1
1. Introduction............................................................................................................................3
2. Discussion..............................................................................................................................3
2.1 Definition of Cross Border M&A....................................................................................3
2.2 Different Circumstances under which MNEs use Cross Border M&A...........................4
2.3 Case Studies for Successful and Unsuccessful Cross Border M&A................................6
2.4 Identification and Discussion of the Reasons for Success and Failure of Cross Border
M&A......................................................................................................................................7
3. Conclusion..............................................................................................................................9
4. Recommendations................................................................................................................10
Reference List..........................................................................................................................12

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1. Introduction
M&A or mergers and acquisition is subsequent transaction, where the subsequent
possession of different companies or the respective operating unit is being consolidated with
any other entity1. This particular aspect could easily enable the organizations in growing as
well as downsizing and changing the type of the company or competitive positions. A merger
is the legalized consolidation of 2 distinct businesses into one. However, the acquisition takes
place as soon as anyone entity is taking possession of different assets, equity interest and
stock of the other objects. Two different types of transactions are responsible for resulting in
the asset or liability consolidation within one body2. An acquisition as well as takeover is
referred to as the subsequent purchasing of any one organization by any other organization or
business entity. Consolidation takes place when two organizations amalgamate for forming a
completely new enterprise for ensuring independent ownership. The following report outlines
a brief discussion on the cross border M&A with their importance in multinational
enterprises.
2. Discussion
2.1 Definition of Cross Border M&A
Cross border mergers and acquisitions could be defined as the deals within domestic
firms and foreign companies within the respective target country3. The subsequent tendency
of this incrementing this type of M&A has eventually incremented with the trend of
globalization in the worldwide economy. It should be considered that the M&A could
represent only when there exist chances of extra income for doing so. These two international
and domestic companies should obtain maximum success from the deal that is being made.
1 Deng, Ping, and Monica Yang. "Cross-border mergers and acquisitions by emerging market firms: A
comparative investigation." International Business Review 24, no. 1 (2015): 157-172.
2 Du, Min, and Agyenim Boateng. "State ownership, institutional effects and value creation in cross-border
mergers & acquisitions by Chinese firms." International Business Review 24, no. 3 (2015): 430-442.
3 Xie, En, K. S. Reddy, and Jie Liang. "Country-specific determinants of cross-border mergers and acquisitions:
A comprehensive review and future research directions." Journal of World Business 52, no. 2 (2017): 127-183.

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Several local firms in the emerging markets subsequently overstate their respective
capabilities for the core purpose of attracting M&A. However, the foreign companies do such
activities for their due diligences, while consideration of the merger is dealing with any home
country firm4. The main reason is that several foreign firms could undertake the help of the
management consultancy as well as investment banks, even before they could venture into
many mergers and acquisitions.
2.2 Different Circumstances under which MNEs use Cross Border M&A
Several multinational enterprises or MNEs utilize such type of M&A in their business
for ensuring that they gain more profit and popularity in the globalized markets5. The
investors are eventually drawn to or are interested in investments in the high flying
corporation that is dependable as well as are increasingly growing or engaging in expansion
drive of several business units and businesses. The overall performance of the companies
might be the result of excellent corporate governance practice as well as policy that is being
adopted from the management to notify the growing target market. In the globalization
period, such M&A have majorly incremented in the entire world6. Several theoretical models
are present that help in demonstrating these M&A in the most effective manner. The cross
border M&A are the specific increment trend in the entire business environment, especially
for multinational enterprises.
The most significant forces of such type of M&A include building shareholder values,
getting scope in the globalized competitive environment and few others7. Moreover,
4 Reddy, Kotapati Srinivasa, Vinay Kumar Nangia, and Rajat Agrawal. "The 2007–2008 global financial crisis,
and cross-border mergers and acquisitions: A 26-nation exploratory study." Global Journal of Emerging Market
Economies 6, no. 3 (2014): 257-281.
5 Green, Milford B. "Mergers and acquisitions." International Encyclopedia of Geography: People, the Earth,
Environment and Technology (2016): 1-9.
6 Alimov, Azizjon. "Labor market regulations and cross-border mergers and acquisitions." Journal of
International Business Studies 46, no. 8 (2015): 984-1009.
7 Tao, Fang, Xiaohui Liu, Lan Gao, and Enjun Xia. "Do cross-border mergers and acquisitions increase short-
term market performance? The case of Chinese firms." International Business Review 26, no. 1 (2017): 189-
202.

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organizations have to consider certain actions that could easily drive individual firm values.
Different circumstances, in which MNEs utilize cross border M&A are as follows:
i) Global Competitive Environment: The first and the foremost circumstance, in
which MNEs utilize cross border M&A is in a globally competitive environment. Every
organization tends to participate in the high competition in the existing market all over the
world8. As a result, it is required to be a part of the global competitive environment and
ensure that better effectiveness and popularity is being gained without any complexity.
ii) Technological Changes: Another significant and important circumstance, in which
MNEs utilize cross border M&A is major changes in technology. Every country has their
unique technological advancements, which should be adopted on a priority basis so that better
effectiveness and efficiency is gained without any type of issue9. Such distinct changes are
also required for making the business processes highly effective and efficient, in comparison
to other organizations.
iii) Regulatory Changes: The following vital and noteworthy circumstance, in which
MNEs utilize cross border M&A would be regulatory changes. It is needed to get adapted to
the regulatory changes in every country, so that the respective organization can maintain
compliance under every circumstance10. Management of regulatory, policy, as well as
procedural changes, could be easily applied to the business for the industry.
iv) Capital Market Changes: This is yet another vital and significant circumstance, in
which MNEs utilize cross border mergers and acquisitions. Since there are certain changes in
the capital market, the multinational companies get new business opportunities that help them
8 Humphery‐Jenner, Mark, Zacharias Sautner, and Jo‐Ann Suchard. "Cross‐border mergers and acquisitions:
The role of private equity firms." Strategic Management Journal 38, no. 8 (2017): 1688-1700.
9 Francis, Jere R., Shawn X. Huang, and Inder K. Khurana. "The role of similar accounting standards in cross‐
border mergers and acquisitions." Contemporary Accounting Research 33, no. 3 (2016): 1298-1330.
10 Boateng, Agyenim, Xiuping Hua, Moshfique Uddin, and Min Du. "Home country macroeconomic factors on
outward cross-border mergers and acquisitions: Evidence from the UK." Research in International Business and
Finance 30 (2014): 202-216.

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in gaining access to the strategic proprietary assets. Moreover, they would be able to gain
market power as well as dominance in the business without much complexity11. Proper
diversification and spreading of the risks are also possible widely. Hence, major effectiveness
would be gained by these companies as soon as they take up cross border mergers and
acquisitions.
2.3 Case Studies for Successful and Unsuccessful Cross Border M&A
Several organizations in the entire world have included cross border M&A in their
businesses for gaining maximum success and high profit without much complexity12. A
proper framework is needed to be taken into consideration for checking the competitiveness
of the host economies. Two case studies for successful and unsuccessful this type of M&A
are as follows:
i) Successful Cross Border M&A Case Study: One of the most common and recent
case studies of this cross border M&A deals is for the deal of the Jet Etihad and Air Asia deal
within the aviation sector within India. There are both support as well as resistance to the Jet
Etihad deal and Air Asia deal13. It has eventually made other international organizations wary
of entering into the market of India. As a result, the entire Indian government and economy
were majorly benefitted, and they supported this particular cross border merger and
acquisition. Moreover, as India is a developing country, the involvement of other countries
and other companies in their businesses and economies would have been highly beneficial, as
compared to the rest of the countries. Furthermore, complexities related to the management
of the economy in the government would have been resolved to a high level.
11 Hajro, Aida. "Cultural influences and the mediating role of socio-cultural integration processes on the
performance of cross-border mergers and acquisitions." The International Journal of Human Resource
Management 26, no. 2 (2015): 192-215.
12 Morresi, Ottorino, and Alberto Pezzi. Cross-border mergers and acquisitions: Theory and empirical evidence.
Springer, 2014.
13 Sinkovics, Rudolf R., Noemi Sinkovics, Yong Kyu Lew, Mohd Haniff Jedin, and Stefan Zagelmeyer.
"Antecedents of marketing integration in cross-border mergers and acquisitions: Evidence from Malaysia and
Indonesia." International Marketing Review 32, no. 1 (2015): 2-28.

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ii) Unsuccessful Cross Border M&A Case Study: Although, maximum cross border
M&A have been responsible for ensuring strategic growth as well as the revival of the
stressed assets, there are few unsuccessful case studies as well14. One of the most popular
examples of such failure in the country of India is HDFC and Max Life. Max Life is the
fourth largest private insurance organization in India. It is a specific joint venture within a
Japanese Insurance Company, called Mitsui Sumitomo Insurance Company and Max
Financial Services. Max Financial Services took the Japanese Insurance Company comprised
of 26 percentage of shares and the rest of the shares. HDFC Standard Life Insurance was a
formerly unlisted organization as well as a joint venture within HDFC with 61.5% shares. To
get HDFC listed, they decided to get merged with Max Life15. However, the proposed merger
was not eventually approved by the sectorial authorities and IRDB or Insurance Regulatory
and Development Board.
2.4 Identification and Discussion of the Reasons for Success and Failure of Cross
Border M&A
A specific transaction that is legally structured as the acquisition might comprise of
the major impact to place the business of one particular party under the indirect possession of
different shareholders of the other party16. However, a transaction that is being legally
structured as a merger might provide the shareholders of every party’s control and partial
ownership of the combined company. Moreover, there exists a strategic realignment as well
as technological changes related to mergers and acquisitions. Different tax considerations and
undervalued targets are also considered majorly for these mergers and acquisitions to ensure
14 Ghosh Ray, Kamal, and Sangita Ghosh Ray. "Cross-border mergers and acquisitions: Modelling synergy for
value creation." In Advances in mergers and acquisitions, pp. 113-134. Emerald Group Publishing Limited,
2014.
15 Rao-Nicholson, Rekha, Zaheer Khan, and Peter Stokes. "Making great minds think alike: Emerging market
multinational firms’ leadership effects on targets’ employee psychological safety after cross-border mergers and
acquisitions." International Business Review 25, no. 1 (2016): 103-113.
16 Albuquerque, Rui, Luis Brandão-Marques, Miguel A. Ferreira, and Pedro Matos. "International corporate
governance spillovers: Evidence from cross-border mergers and acquisitions." The Review of Financial
Studies 32, no. 2 (2018): 738-770.

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that better effectiveness is gained under every circumstance17. Furthermore, subsequent
diversification of different risks and threats are also required to be taken into consideration
for better and the most effective results of the organization. The major reasoning for the
M&A is usually given that two different organizations together are responsible for creating
more value as compared to one particular company. The organizations can easily evaluate
various opportunities through the distinct route of the mergers and acquisitions.
The major reasons for success in such type of M&A in different organizations are as
follows:
i) Globalization: The first and the most significant and important reason for success in
the cross border M&A for an organization is globalization in the financial markets. It helps in
combining the promotion as well as selling of goods and services within the most
increasingly integrated and interdependent globalized economy18. As a result, organizations
can ensure better effectiveness without much complexity.
ii) Market Pressures: Another important and significant reason for success in the
cross border M&A for a company is market pressures as well as falling demand for the
international competition. These market pressures are responsible for understanding the
importance of market analysis and how to deal with several complexities related to higher
competition.
iii) Seeking new Market Opportunities: Moreover, the respective organizations can
seek new market opportunities due to the diversified culture and working conditions, and as a
result, the cross border M&A become successful19. The technology is evolving in a fast
17 Huang, Peng, Micah S. Officer, and Ronan Powell. "Method of payment and risk mitigation in cross-border
mergers and acquisitions." Journal of Corporate Finance 40 (2016): 216-234.
18 Yang, Monica. "Ownership participation of cross-border mergers and acquisitions by emerging market firms:
antecedents and performance." Management Decision 53, no. 1 (2015): 221-246.
19 Alimov, Azizjon. "Labor market regulations and cross-border mergers and acquisitions." Journal of
International Business Studies 46, no. 8 (2015): 984-1009.

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manner, and thus market opportunities could be taken majorly to provide maximum
efficiency in the business.
The significant reasons for failure in this type of cross border M&A in different
organizations are as follows:
i) Geographic Scope of the Deal: Due to the diversified change in the transactions,
there is a high chance that several issues might arise. The most distinct factors, in this case,
include different cultural backgrounds, dissimilarity in business practices as well as various
language necessities. As a result, the organizational members are not able to mix with
members of other companies; hence leading to a significant failure in the M&A.
ii) Different Business Policies: Different countries comprise of different business
policies, and it is being observed that most of the organizations that have undertaken cross
border M&A are being unable to implement the distinct business policies successfully20. It
arises a significant issue for the M&A, and it becomes a significant failure for the entire
business.
3. Conclusion
Hence, a conclusion could be drawn that cross border M&A are required for several
reasons like financial synergy for the low cost of capitals, improvement of overall
organizational performances and acceleration of growth and development. Moreover, several
organizations can diversify in their higher growing products as well as markets and also for
incrementing the market shares to position broad market access. The respective company
should have the willingness to undertake the risks and then make suitable investments for
providing advantages ultimately from the merger as the industry and competitors would be
20 Humphery‐Jenner, Mark, Zacharias Sautner, and Jo‐Ann Suchard. "Cross‐border mergers and acquisitions:
The role of private equity firms." Strategic Management Journal 38, no. 8 (2017): 1688-1700.

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taking heed promptly. It is required to make multiple bets for reducing and diversifying the
risks to a high level. The overall management of the respective acquiring firm should learn to
be resilient and can adapt to the changes for ensuring ever-changing business dynamics
within the industry. The above-provided report has accurately described detailed analyses of
this type of M&A for multinational enterprises with relevant details.
4. Recommendations
Suitable recommendations for the multinational enterprises regarding cross border
M&A in their businesses are as follows:
i) Proper Management: The first and foremost recommendation for the multinational
enterprises in undertaking cross border M&A within their business successfully would be
appropriate management of the company. Few of the most critical management areas
eventually demand keenness in their handlings like product integration or development,
aspects of human resources as well as market analyses. In such market analyses, it is
undeniable that on either side of the world, there could be issues related to managing different
types of problems and complexities due to cross borders. Proper management should include
various aspects of HR and the cross border M&A would depend on a large scale of HR, as
soon as sustainable success is being attained.
ii) Business Policies: The second suitable and sufficient recommendation for the
multinational enterprises in undertaking cross border M&A within their business success is
the implementation of different business policies. Since every country has its business
policies, it is exceptionally vital and significant to involve these policies, so that the execution
of business processes is being done correctly. In several countries, these policies allow
monopolies. As a result, as soon as a single business entity eventually manages a specified
product, a monopoly is created. The cross border M&A is referred to as the precedent of

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these monopolies, and hence it is recommended to deploy different business policies of the
MNEs.
iii) General Business Conditions in the Country: Another suitable recommendation
for the multinational enterprises in undertaking cross border M&A within their business
successfully is to implement generalized business conditions within the country. Different
requirements like guaranteed provision of availability and security of the most convenient
and reliable insurance plans and policies must be catered for. It is a significant demand that
the conditions are being availed without any type of delay. These conditions of active
business must be properly streamlined for ensuring that there could be a significant guarantee
of ROI in the cross border merger as well as acquisition transaction.