Lawstreet Journal

Palpable Effects of Protectionism on Cross Border Mergers and Acquisitions

Lawstreet Journal 13 Apr 2020 11:03pm

Image courtesy: Lawstreet Journal Business Palpable Effects of Protectionism on Cross Border Mergers and Acquisitions

According to the latest preliminary data published by the Refinitiv, the value of the mergers and acquisition (M&A) activity globally totalled to about $3.9 trillion for the year 2019 [1]. The United Nations Conference on Trade and Development (UNCTAD), in its World Investment Report of 2019 has discussed the growth of investments in India for the year 2018. The Report highlighted among other things that the development of communication, manufacturing and financial services resulted in the infusion Foreign Direct Investment (FDI) of up to $42 billion in India in the year 2018. Similarly, South Asia received $54 billion worth FDI, affirming that India received nearly 77% of the total FDI of the region. [2] The contribution of FDI to the economy of a country is enormous and cannot be denied, yet concluding a cross border M&A deal is getting problematic for the companies and the law firms involved owing to the ever-expanding meaning of national interest. [3] Countries in a bid to protect jobs and local industries take recourse to protectionist measures and camouflage them as a national defence mechanism. 

Protectionism as a concept manifests in a number of economic and political setups and the present work focusses on the restrictions on foreign investments by legislative mechanisms to hinder or affect the result of the deal. [4] The legislations dealing with cross border M&A, differ across countries and difficulty in integration results in failure of such deals. Most of the time, the delayed approvals make the whole transaction expensive… Continue Reading...

Tagged: Merger and Acquisition  
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