The Performance of UK Takeovers: Does the Nationality of Acquirers Matter?

Using data for 755 acquisitions of manufacturing firms in the UK over a seven year period from 1990 to 1996, we find that the direct effect of an acquisition induces a labour productivity dip in the immediate aftermath of a takeover. This dip is seen for UK, US and the rest of the world acquisitions and is of the magnitude of between 6 and 9%. Similar to Harris and Robinson (2002 Harris, R. and Robinson, C. 2002. The effect of foreign acquisitions on total factor productivity: Plant‐Level evidence from UK manufacturing, 1987–1992. Review of Economics and Statistics, 84(3): 562–68. [Crossref], [Web of Science ®] , [Google Scholar]) we conclude that the decline in productivity is consistent with the adjustment costs of acquisition.