Merging into Wealth?
DIW Econ Economic Bulletin, No. 4
Company takeovers are a highly sensitive topic, even more so if they are initiated by a foreign firm attempting to gain control over a domestic enterprise. In such cases, trade unions and governments, who fear the loss of domestic jobs, tend to call for the imposition of measures to limit such acquisitions. Such restrictive policies are notwithstanding most governments’ official commitment to the free movement of capital, especially between members of the European Common Market. However, a closer look at the actual consequences of foreign takeovers on domestic firms in Germany reveals how thin the economic rationale for such intervention is in reality. Our research demonstrates that foreign acquisitions do not usually lead to job relocation and that, if anything, their actual economic effect is mostly overstated.PDF Download of this publication