On the behaviour of mergers and acquisitions in the eye of political cyclone: the case of Egypt

Abstract

Since the global financial crisis in 2008, foreign direct investment (FDI) trend has been generally declining with the exception of 2011. Surprisingly, mergers and acquisitions (M&A) trend did not show this consistent downward trend; rather it has shown greater variability even its terms of direction. This study aims at providing some answers to these questions using data of M&A transactions from 2008 until 2014. The paper is divided into four sections. In addition to an introduction, section two gives a very brief exposition of the relevant literature. Section three analyzes the data and draws important observations and results. Finally section four concludes and gives some insights.

Keywords:

• Development
• Egypt
• FDI
• M&As

Disclosure statement

The authors report no conflicts of interest. The authors alone are responsible for the content and writing of this article.

Notes

1 An important strand of the literature pioneered by Neary (2004) combines in a general equilibrium setup trade theory, industrial organization and strategic behaviour of firms between firms to explain the behaviour of M&A.

2 The database included figures for 2015 and 2014; however, it is decided not to use these last two years since data usually comes with a lag for obvious reasons; hence there is a high probability that figures for 2014 are incomplete whereas figures for 2015 are not representative.

3 These sectors are: Leisure and tourism, transport, telecommunication, construction, real estate, financial services, food and beverage, health care, industrial manufacturing, oil and gas, agriculture, media, retail and finally consumer good.

4 Actually, the common perception toward having Egyptian TNCs investing outside Egypt is that at least it is not a patriotic action.