Public enterprises in the market for corporate control: recent worldwide evidence

This paper analyzes deals involving private and public enterprises,i.e. State-Owned Enterprises (SOEs) worldwide since 2004. We consider four types ofdeals: privatizations of SOEs, public enterprises acquiring private ones (public-privatedeals), private reorganizations (i.e private firms acquiring a private target) and publicreorganizations. (i.e. both acquirer and target are SOEs). We study whether the pre-deal performance and corporate characteristics of the acquirer and target companiesvary across the four types of deals depending on ownership: public or private. Data aretaken from Zephyr (Bureau Van Dijk), which provides information on completed dealsworldwide and Orbis, a firm-level dataset (also implemented by BvD). Some results ofprevious literature on M&As performed by private firms (‘the inefficiency managementhypothesis’) are both confirmed and expanded. Acquirers involved in deals are bothlarger and better performing than their targets but some qualifications are in orderwith respect to ownership. The difference in size and performance between acquirersand targets is in fact more pronounced for public with respect to private acquirers.The evidence thus points to an active role of SOEs as acquirers, as they significantlyout-perform relative to their targets, including private ones, in terms of return on sales.Given these novel findings, further research is needed to examine the motivations behindthe different types of deals considered and to verify the role of government ownershipin the contemporary global economy.