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Rising Metropoli: The Geography of Mergers and Acquisitions in Germany

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  • Andres Rodriguez-Pose

    (Department of Geography and Environment, London School of Economics, Houghton Street, London, WC2A 2AE, UK. A.Rodriguez-Pose@lse.ac.uk)

  • Hans-Martin Zademach

    (Institute of Economic Geography, Munich School of Management, University of Munich, Ludwigstr. 28, 80539 Munich, Germany. Fax: + 49 89 2180 3809. E-mail: Zademach@bwl.uni-muenchen.de)

Abstract

High levels of mergers and acquisitions (M&As) were a characteristic of the global economy in the 1990s. The overall effects of M&As on economic welfare and their spatial implications, however, remain a profoundly neglected topic. Using three standardised indices representing the relative quantity of take-overs in each German Regierungsbezirk, the paper demonstrates that the recent wave of M&As has resulted in a major concentration of firms and economic activity in the main German metropoli. The paper then turns to a study of the flows of M&A transactions. By means of regression analysis, it identifies the main drivers of the geographical concentration of firms to be indicators of the general level of agglomeration (i.e. regional GDP and population) and the concentration of political power in the region. The results also indicate that investment in R&D, the general level of education, or unemployment, when considered in combination with agglomeration indicators, play a negligible role in determining M&A flows. With respect to the geographical distance between a merging or acquiring firm and its target, the results are twofold. While, when considered on its own, distance has a very weak or—depending on cases—insignificant association with the territorial distribution of M&A activity, when estimated in conjunction with agglomeration, proximity appears to play a distinctive role in the geography of M&As in Germany.

Suggested Citation

  • Andres Rodriguez-Pose & Hans-Martin Zademach, 2003. "Rising Metropoli: The Geography of Mergers and Acquisitions in Germany," Urban Studies, Urban Studies Journal Limited, vol. 40(10), pages 1895-1923, September.
    • Handle: RePEc:sae:urbstu:v:40:y:2003:i:10:p:1895-1923
    DOI: 10.1080/0042098032000116031
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    1. Ron Boschma & Rik Wenting, 2011. "The spatial clustering of the Dutch banking sector in the Amsterdam region: the importance of spinoffs and mergers in the period 1850-1993," ERSA conference papers ersa10p1158, European Regional Science Association.
    2. Abhirup Chakrabarti & Will Mitchell, 2013. "The Persistent Effect of Geographic Distance in Acquisition Target Selection," Organization Science, INFORMS, vol. 24(6), pages 1805-1826, December.
    3. James Foreman-Peck & Tom Nicholls, 2013. "SME takeovers as a contributor to regional productivity gaps," Small Business Economics, Springer, vol. 41(2), pages 359-378, August.
    4. Hans-Martin Zademach, 2006. "Germany as an emerging archipelago economy: On some less obvious implications of corporate takeovers and mergers," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 7(1), pages 40-45, April.

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