Performance of unlisted Italian companies acquired by multinationals from emerging markets
Authors: Aureli Selena 
Published: January 2017

Purpose– The purpose of this paper is to shed lights on both economic and social impacts associated to the increasing amount of western companies acquired by multinationals from emerging countries. Focussing on the Italian context, its main intent is to analyze changes in targets’ performance and capability to contribute to stakeholders’ wealth to assess the business and social viability of this type of deal.Design/methodology/approach– Operations of mergers and acquisitions (M & As) were identified through Zephyr (Bureau VanDijk’s database). Only acquisitions of a controlling interest were considered for a total of eight case studies. Financial Statements and Management Reports over a eight-year period have been analyzed to understand the rationale of the deal and to assess financial performance and company social impact before and after the merger.Findings– Results suggest that foreign investors mainly search for know-how and technical expertise and their arrival does not lead to better financial performance. Only one target records profits. Four companies are still controlled by Indian investors while the other four have been dismissed. Nevertheless Indian investors are not destroying profitable organizations as these were recording negative results already before the merger. With reference to value added distribution, acquisitions do not reduce local stakeholders’ wealth for the benefits of shareholders. Jobs are preserved and valued added is mainly distributed to employees. Great difficulties in achieving the expected value resulting from synergies emerge.Research limitations/implications– Observations emerging from this explorative study are limited to the case studies analyzed while it could be important to enlarge the number of companies to investigate, including targets acquired by Russian, Chinese and Brazilian investors. Moreover, additional information could be obtained from interviews with top managers to reveal how they interpret the merger’s success or failure. Also interviews with local stakeholders like suppliers, clients, representatives of employees and local institutions could be of great importance as they can help identify their specific point of view about the social and economic impact of foreign investors’ arrival.Practical implications– With reference to the public debate on the increasing number of European companies sold to foreign investors, research findings indicate that FDI from emerging economies do not necessarily lead to job losses or target’s closure. Indian investors are interested in brand, knowledge and other intangible assets (like Chinese ones). However they do not relocate production or expertise abroad. Some target companies record higher investments financed by the new shareholder, indicating that the arrival of new investors owing a large amount of money to invest in financial distressed Italian companies, can be beneficial to the local economy.Originality/value– Most literature studies M & As from the buyer’s perspective to assess if shareholders’ value is created (Tuch and O’Sullivan, 2007; Meglio, 2009; Dauber, 2012). On the contrary this research adopts the target’s and stakeholders’ perspective, in order to measure the value created and distributed to the territory. Moreover it focuses on unlisted companies, while most studies deal with publicly traded companies (Meglio and Risberg, 2010; Meglio and Risberg, 2012b). Lastly it enriches M & A mainstream literature, which usually adopts a positivistic mindset and rely on statistical analysis, by adopting a qualitative approach based on case study analysis.