Academic research on the dynamic relationship between the U.S. and Ireland in terms of cross-border M&As is sparse.
Given that Ireland has used FDI as economic development strategy, an extensive academic literature has focused on the determinants of FDI, namely: EU location, economic growth, skilled workforce, relatively low corporation tax rate, common law system, English-language speaking environment, industry clusters, R&D tax credits. But why do U.S. firms seek to acquire Irish firms?
To address this question and perceived gap in the literature, this paper seeks to to identify possible strategic motives that encourage U.S. firms to acquire or merge with an Irish firm.
The first section provides a overview to the research question context.
The second section provides a descriptive background on inflows of FDI globally and comparatively with those of cross-border M&As, before focusing on inflows into Ireland with particular reference to those originating in the U.S.. The key focus is on presenting an historical evolution of the U.S. M&A story in Ireland utilising a Bloomberg dataset. Based on this descriptive data analysis, five key industries are identified for subsequent case study analaysis, namely: 1. Technology; 2. Financial; 3. Health Care; 4. Industrial; and 5. Basic Materials.
The third section provides a review of the extant literature on the motivations for cross-border M&As, and creates a theoretical framework to be applied to the relevant industries. These may be summarised as follows: synergies, increased market share, fast entry into new markets, R&D, improved management, empire building and additional resources.
Methodologically this paper is both empirically and case study-based. The dataset used for cross-border M&As’ inflows and key industry identification was sourced from Bloomberg. The case studies chosen for each industry relied on secondary sources, namely presss and company information.
The fourth section is a case study analysis utilising the theoretical framework to examine the five key industries previously identified. The key findings are that ‘Fast Entry into a New Market’, ‘Synergies’, ‘Additional Resources’ and ‘Market Share and Market Power’ are the most relevant, strategic motives of U.S. cross-border M&As in Ireland.
This paper, whilst exploratory in nature, may be seen as a starting point in the analysis of cross- border M&As into Ireland. In contributing to a deeper academic understanding on the strategic motives of U.S. cross-border M&As in Ireland at a firm-based level, it presents a deeper and more dynamic environment for FDI which contrast with that of literature on FDI determinants. In essence, small and medium sized Irish companies in the industries identified are very attractive acquisition targets for international buyers, particularly from the U.S.
Nonetheless, there are a number of limitations to this research. First, the dataset was sourced from Bloomberg and there were some inconsistencies relating to relative accuracy of data and indeed missing values. Second, the case study research on industries was secondary in that it was sourced from company and press publications. Subsequent research requires primary research in the form of survey-based analysis directed at companies across the industries identified.
U.S. FDI in Ireland, U.S. Mergers & Acquisitions, Motives for Mergers & Acquisitions, Mergers & Acquisitions and FDI
