Value Creation through M&A in CEE Greece Turkey: An Empirical Study

This research examines 350 M&A deals that were announced and completed in CEE Turkey and Greece between 2000 and 2010. Descriptive statistics show that the majority of the deals announced during that period were cross-border in nature and the CEE Turkey and Greece companies were the target in the majority of cross-border deals. The result of event studies support previous research with regards to M&A activity in emerging markets: M&A deals in CEE Turkey and Greece create significant value for both the target the bidder companies and for the combined entity. The analysis of value drivers shows that cross-border deals create significantly less value than local deals. Moreover transactions in which a CEE company enters a foreign market create less value amongst cross-border deals. We also find evidence that supports the agency theory of free cash flow: transactions announced during the credit crisis period in which firms held less cash create more value. Finally there is strong evidence that intra-industry M&A deals have a more positive impact on equity value than inter-industry transactions.