Original Research

Determinants of cross-border mergers and acquisitions in the freight and logistics industry of South Africa

Chantelle de Villiers, Henri Bezuidenhout, Sonja Grater, Ewert P.J. Kleynhans
Acta Commercii | Vol 19, No 1 | a725 | DOI: https://doi.org/10.4102/ac.v19i1.725 | © 2019 Chantelle de Villiers, Henri Bezuidenhout, Sonja Grater, Ewert P.J. Kleynhans | This work is licensed under CC Attribution 4.0
Submitted: 04 October 2018 | Published: 25 September 2019

About the author(s)

Chantelle de Villiers, School of Economic Sciences: TRADE Research Entity, North-West University, Potchefstroom, South Africa
Henri Bezuidenhout, School of Economics, North-West University, Potchefstroom, South Africa
Sonja Grater, School of Economics, North-West University, Potchefstroom, South Africa
Ewert P.J. Kleynhans, School of Economics, North-West University, Potchefstroom, South Africa


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Abstract

Orientation: The article reports on applied and practical research that focuses on the understanding of the motivation and actions of Multinational Enterprises in Africa as far as mergers and acquisitions (M&As) are concerned.

Research purpose: This study examines developments in the freight and logistics industry through M&As in South Africa.

Motivation for the study: It is necessary to gain a better understanding of M&As from a firm-level perspective in the South African context. Little research exists on the dynamics of M&As, and even less relating to the logistics industry that plays such a large role in trade in the region. This research adds substantial and significant original work to the scarce body of meaningful literature on foreign direct investment (FDI) in Africa.

Research design, approach and method: This study used a case study approach employing structured interviews. The population was freight and logistics companies that were involved in M&A activities in South Africa. Quantitative data and other information from various databases, published M&A data and financial statements were analysed to obtain background views of the companies’ where after, three companies were eventually selected. Direct unstructured interviews were then conducted with the main decision makers and a qualitative thematic analysis of the companies’ responses. Related themes and patterns were identified through the frequency of occurrence, similarities, differences and general patterns observed. This method yielded the most insight into the processes and company dynamics involved.

Main findings: International M&As in the freight and logistics industry provide companies with international scale and effectively link to international markets. Companies benefit from expanded market opportunities across national borders, which generate substantial revenues, geographical growth and business expansion. It renders synergy and additional competitive advantage.

Practical/managerial implications: Theoretical and practical aspects of FDI, such as motives for market entry, ownership, location and entry barriers within the context of multinational enterprises, globally, were investigated. Little data exist on the freight and logistics industry in Africa and also on M&As, which presented limitations. Companies are inexperienced and need to involve more expertise in M&A processes. The results also found that South African companies need to expand their cultural intelligence and negotiation skills, especially within a diverse cultural realm, before entering into M&A deals with foreign companies.

Contribution/value-add: Services are determinants of trade volumes and offer distributional effects and patterns of economic growth, development and FDI inflows. Little research exists on the dynamics of M&As in the freight and logistics industry, especially within the African context. This study also makes some contribution in that regard.


Keywords

foreign direct investment; merger; acquisition; services; freight and logistics; inorganic growth; industries; multinational enterprise

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