Cross Border: Mergers & Acquisitions
                     CROSS BORDER 
MERGERS & 
ACQUISITIONS
Introduction
• Cross border Mergers and Acquisitions or M&A are 
deals between foreign companies and domestic firms 
in the target country.
• The trend of increasing cross border M&A has 
accelerated with the globalization of the world 
economy.
Source: www.managementstudyguide.com 2
TYPES OF CROSS BORDER 
MERGERS
• The most popular types of mergers are horizontal, 
vertical, market extension or marketing/technology 
related concentric, product extension, conglomerate, 
congeneric and reverse.
• Recently, the concept of inbound and outbound 
mergers was also introduced in the Companies Act, 
2013 as part of Section 234 of the Act.
Source: taxguru.in 3
Inbound and Outbound 
M&A’s
• Inbound M&A’s In this process foreign company 
mergers with or acquires an Indian company. 
E.g. Daichii Acquiring Ranbaxy 
• Outbound M&A’s In this process an Indian company 
merger with or acquires a foreign company. 
E.g. Tata steel Acquires Corus      
Source: taxguru.in 4
Golden decade
• Indeed, the 1990s were a “golden decade” for cross 
border M&A with a nearly 200 percent jump in the 
volume of such deals in the Asia Pacific region. 
• This region was favored for cross border M&A as most 
countries in this region were opening up their 
economies and liberalizing their policies, which 
provided the much, needed boost to such deals. 
Source: www.managementstudyguide.com 5
Recent Scenario
• Recently, Latin America and Africa are attracting 
more cross border M&A. 
• This due to a combination of political gridlock in 
countries like India that are unable to make up their 
minds on whether the country needs more foreign 
investment, the saturation of China, and the rapid 
emergence of Africa as an investment destination. 
• Further, the fact that Latin America is being favored is 
mainly due to the rapid growth rates of the 
economies of the region.
Source: www.managementstudyguide.com 6
Factors to be considered
• Having said that, it must be remembered that cross 
border M&A’s actualize only when there are 
incentives to do so. In other words, both the foreign 
company and the domestic partner must gain from 
the deal as otherwise; eventually the deal would turn 
sour. 
Source: www.managementstudyguide.com 7
Risk Factors
• the foreign firms also consider the risk factors 
associated with cross border M&A that is a 
combination of political risk, economic risk, social 
risk, and general risk associated with black swan 
events. 
• The foreign firms evaluate potential M&A partners 
and countries by forming a risk matrix composed of 
all these elements and depending upon whether the 
score is appropriate or not, they decide on the M&A 
deal. 
Source: www.managementstudyguide.com 8
Benefits of Cross Border 
Mergers & Acquisitions
• Geographic and industrial diversification
• Technology transfer
• Avoiding entry barriers & Industry consolidation
• Tax planning and benefits 
• Foreign exchange earnings & Accelerating growth 
• Utilization of material and labour at lower costs
• Increased customers base & Competitive advantage
Source: taxguru.in 9
Challenges with Cross 
Border Mergers & 
Acquisitions
• Legal issues in different countries 
• Accounting challenges & Taxation aspects
• Technological differences
• Political landscape & Strategic issues
• Overpayment in the deal 
• Failure to integrate & HR challenges
Source: taxguru.in 1
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Conclusion
• There has been a huge outcry from civil society in 
almost all the emerging markets in recent months. 
• This has been mainly due to public anger at crony 
capitalism and tiny elite cornering all the benefits. 
• Therefore, the most essential condition before cross 
border M&A is actualized is that there must be 
regulatory scrutiny about the ownership patterns and 
the holding structures.
Source: www.managementstudyguide.com 1
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