During the year 2006, around 28,000 mergers and takeovers have been registered. It is 9,000 more than in 2003, and reflects well the fact that to keep
growing, companies need sometimes an external support.
This phenomena concern all private and public companies, and is a major strategic point in the
globalized business scenario.
So far, it will be interesting in this report analyzing some international cases such as: Air-France / KLM, Thomson / Reuters, GDF / Suez, Daimler / Chrysler, BP /Amoco and Rentokil / PCL. I will proceed the same way with all the cases.
To start with, I will present briefly the two companies and then I will analyze the drivers that made the deal to occur. To conclude, I will make comments on the success or failure of the operation.
[...] This is a very ambitious development strategy that will represent Billion expenditures per year as average. If we take a look to the market, both companies need this deal to exist in the market such as in Europe where the market will be soon opened to every supplier, marking an end to every National company's hegemony. Regarding the synergies that should develop the two entities6, the two strong groups in terms of financial power and organizational structure, should play the major role they pretend to in a mid-term period. [...]
[...] Nowadays, the Current value is approximately I - d ) My oPInIon As far as I am concerned, the operation occurred at the right time. Air-France was facing a stagnation of its activity and the CEO wanted to change its organizational process to get more profits and attract investors to buy shares in the stock exchange. So far, KLM was the right choice. The company was not strong enough to face global competition in a mid-term period unless another company saved it; but was still benefiting from a good brand image and a potentially growing niche network such as Northern Europe. [...]
[...] The Ke y pe ople : Bria n McGowa n (Cha irma Doug Flynn (CEO) Britis h Ele ctric Tra ction P LC: This company founded in 1895 in England was the leading manufacturer and operator of electric railway ram system. It was totally involved in the electrification of tramways in British towns and then moved to its manufacturing. Its two core activities were: passenger & freight transport and electricity generation & distribution. Then the company started to diversify and organized its activities into 6 divisions: transport, industrial service, construction, electronics, leisure and publishing11. [...]
[...] In fact, this ‘mixed' development represents a model of differentiation among the other actors such as Ford and BMW. The key drivers of this merger were: Reinforce financial power of both companies Increase market shares to become the 5th worldwide car manufacturer Take competitive advantage, thanks to a differentiation strategy The fact that Chrysler was suffering a long series of setbacks and that Daimler was looking for a company which is not too expensive but with a good background to merge with and create a bigger group, made those two companies decide to enter the negotiations. [...]
[...] Thus, the principal drivers are: Become the worldwide leader in natural liquid gas distribution Become the 4th European multi-energy supplier Be a committed player in sustainable development 5 Source : http://www.suez.fr/en/groupe/profile/key-figures/group-key-figures/ - December st Currently, the two companies have got complementary activities. This merger could give them the opportunity to know an organic development. In an operational point of view, they could increase R&D activities and develop new distribution networks. Moreover, it seems that the French government is ready to change some of its laws in order to sell shares and make the merger possible. [...]
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