Horizontal, Vertical, and Conglomerate Cross-Border Acquisitions

Using data on cross-border acquisitions (CBAs), this paper explores the distribution of alternative strategies pursued when multinational enterprises integrate foreign subsidiaries into their organizational structure. Based on a measure of vertical relatedness, each of the 165,000 acquisitions in our sample covering 31 source and 58 host countries can be classified as horizontal, vertical, or conglomerate. Three novel features of CBAs are highlighted. First, horizontal and vertical CBAs are relatively stable over time. Second, a considerable part of CBAs are conglomerate acquisitions whereby the financial sector is an important, though by far not the only, segment involved. Third, the wave-like growth of CBAs arises primarily from changes in conglomerate activity