Europe Economy

10 Pages 2602 Words

ition is a strategy through which one firm buys a controlling or 100 per cent, interest in another firm with the intent of using a core competence more effectively by making the acquired firm a subsidiary business within its portfolio (Hanson, D. & Dowling, P. 2002, p.232).

The successful use of an acquisition is another way a firm can differentiate it from its competitors. Another trend in acquisition strategies is the rapid increase in the number of acquisitions completed between firms based indifferent countries. These transactions are called cross-border acquisitions. According to UNCTAD, the total value of worldwide cross-border mergers and acquisitions rose in 1996, for the sixth year running. Cross-border merger and acquisition sales totaled $274.6 billion in 1996. Most of these were majority ownership sales (UNCTAD). Within developed countries, the largest net purchasers are found in Western Europe. Since 1993, their purchases have increased continuously in relation to sales. In absolute terms, purchases started to increase in 1992. Main target countries are the UK and France, and main bidding countries are the UK, Germany and the Netherlands. These countries are interdependent nations in the EU.

When we speak of Europe, we usually speak of EU, the ‘new’ Europe economy. Where countries integrated to co-operate in a great number of areas and to create communities of shared interest and authority. With the continuity enlargement of this European market, it creates the greatest opportunities for businesses to trade in EU. According to European Commission, the data base records 16750 mergers and acquisitions involving an enterprise of the European Union for the year. The number fell by one quarter in 2001 to 12 557, the first decline since 1996. The U.K. accounts for the largest share of mergers and acquisitions activity in the EU, followed by Germany, France and the Netherlands (European Commission, 2001).

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