Does Efficiency Matter in M&A? Evidence from Indonesia’s Industrial Estate Group Companies

The consolidation of Industrial Estate companies in Indonesia into a single holding company is reshaping the structure, behaviour and business models of key actors in the country’s industrial development landscape. This study examines whether there is a relationship between the efficiency levels achieved by Industrial Estate companies and their degree of involvement and strategic role in mergers, acquisitions and consolidation processes within the holding. Because this relationship may operate in different directions, both highly efficient and poorly performing parks may be targeted for integration. The issue is relevant for a wide range of stakeholders, from policy-makers and the holding’s management to investors and regulators. We measure efficiency using two Stochastic Data Envelopment Analysis (SDEA) models. Based on a hand-collected data set of 113 Indonesian Industrial Estates, belonging to 48 corporate groups over the period 2022–2024, the results indicate that consolidation and M&A decisions essentially involve parks located at both ends of the efficiency spectrum, characterised by either relatively high or relatively low efficiency levels.