Edited by Mehmet Demirbag and Attilia Yaprak
Chapter 11: Acquisitions as engines of foreign expansion of Russian multinationals
Compared with the majority of emerging-market investors, Russian multinationals are latecomers to the global business scene. The majority of the large Russian firms that we know today were established only in the mid-1990s, during the country’s privatization process. Their outward investment started to grow fast only a decade later, but has weathered the global crisis relatively well. The majority of these multinationals are based on natural resource extraction, heavy industries (metallurgy) and selected services such as telecommunications and banking. Given these characteristics, it is not surprising that they opt for acquisitions as a preferred mode of market entry in their quest of fast conquest of markets abroad. This chapter analyses the main features of the foreign acquisitions of Russian firms such as the overall drive of Russian firms to control the value chain of their product, be it oil and gas, metals, food, banking services or telecommunications. It puts the analysis into the context of the full Russian market for acquisitions (dominated by local deals but also containing inward and outward investment) and of total foreign direct investment (FDI). The chapter also examines the main characteristics of the mega-deals carried out by Russian firms, such as their use to leapfrog into the global scene without passing the regional route. The concluding part attempts to answer the question if the recent speed of foreign acquisitions is sustainable under the new conditions of the global crisis.
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