The paper shows that the geographical closeness is a characteristic of
great importance for M&As in the container shipping industry. The
motivation for the short distance is based on the information cost. Closely
located acquirers and targets decrease the misunderstandings in
communication with tacit messages. The paper finds that the geographical
distance has a negative impact on takeover flows. M&A activities were
more intense among firms located closely each other due to the increase of
information cost with distance. This implies that carriers seriously take
into account the information cost when acquiring a target company. By
contrast, combinations among small carriers are more likely, too small, to
achieve such economies of scale and instead are motivated by the
elimination of a competitor41