SHIP OF FOOLS OR PASSAGE TO PROFIT? – THE VALUE IMPLICATIONS OF M&A IN THE INTERNATIONAL SHIPPING INDUSTRY

The globalization of markets during the past decades has led to an increasing international division of labor which demands a higher capacity in carriage of freight among the involved regions. The outcome of this is inter alia a continuously growing demand for international maritime transport. At present, approximately 90% of the globally traded goods are transacted by seaway. Unsurprisingly, it has resulted in significant structural changes in the international shipping industry. These changes were attended by Mergers and Acquisitions (M&A). Using the event study methodology, we examine the success of the worldwide M&A activities in the shipping industry during the period of 1980 – 2007. We analyze the value effects of these acquisitions from a shareholder value perspective. Despite generally positive underlying data of the world economy and numerous beneficial arguments from initiators of consolidation activity in the transportation sector, the results indicate that M&A transactions in the maritime transportation sector have resulted in an overall loss of shareholder value within the period of examination