Within the complex globe of corporate mergers and acquisitions, rarely do they commence without having a hitch or resolve with every person smiling. The terms ‘friendly’ and ‘hostile’ are simplified notions for a series of really difficult manoeuvrings and equanimity is really a tough practice for either party involved. But once you have foreign organizations attempting to acquire significant local brands, it’s time to let the jingoism fly, as it usually gets private. The larger the organizations are on the metaphorical chessboard, the far more an outcry is likely to be heard beyond the confines of the boardroom.
A current example is Kraft’s obtain of England’s confectionery giant, Cadbury’s; boy did the British press have a field day stoking public indignation at the loss of such a hallowed brand, now ‘plundered’ by the oh-so-crass American Cheez Whiz purveyors. Shock, horror, liberal doses of snobbery and also fear on the component of the hundreds of workers left questioning what their new masters may do with them. And so it is with neo-liberalism and also the free-market – Darwinism guidelines and weaker businesses must succumb, like the proverbial wounded fawn to the inevitable predatory victor. The tangled politics of corporate ‘land grabs’ are usually a subject for debate, and when governments step into the breach, issues can get messy.
When the joining of two brands happen, numerous new troubles arise – even just before the ink has dried – not least of that are the inter-management aspects, project and staff redundancies, along with the significant questions of how you can re-brand the new entity that has basically just turn into a brand new organism. Add to all of this the public relations elements of handling those whose fingers will inevitably get burned and you get the sense that this is a business move not for the faint-hearted, or feeble minded. And but, they take place all the time with automakers, pharmaceutical businesses, in telecommunications, and in the petroleum business.
There are a couple of very significant, quite renowned merger-acquisition situations nonetheless becoming talked about, having acquired one thing of a mythical status. The two largest were within the last decade and involved the media and telecommunications industries: The AOL Time Warner merger as well as the Vodafone-Mannesmann acquisition in 2002, using the latter getting the biggest in history, and perhaps one of the most contentious. So contentious in reality, that Britain’s Prime Minister, Tony Blair, and German Chancellor Gerhard Schroder, weighed in publically in the time, to what was fast becoming a challenging and heated circumstance. One has to be really careful with terminology – in the press, merger indicates friendly and takeover inevitably has a hostile tag stuck to it – whether that is the reality or not; and what is publicly said surely could not be the case behind closed doors.
UK-based Vodafone had been partnered with German Mannesmann at the time, when the latter bought Orange, which was then the third largest network within the UK (Vodafone getting the first). They made this audacious move with no warning or consent from their partner, Vodafone. And as soon as Orange became the property of Mannesmann, they had been in direct competition for services on UK soil – a fairly unsavoury corporate position, and one that forced the hand of Vodafone to retaliate. And retaliate they did.
Vodafone parried what could have been the beginnings of their demise in this quickly evolving industry with a direct, unsolicited bid aimed in the Mannesmann shareholders. In circumstances like this, leadership skill, a keen ability to see the long game, plus a pinch of good, old-fashioned street smarts had been necessary to not only make the acquisition a reality, but additionally deal with the negative press that the Germans were instigating. Vodafone’s Chief Executive,Chris Gent, and Goldman Sachs’ Scott Mead, who was then the chief advisor on the deal, proved very adept indeed. Mead was an knowledgeable strategist who was in a position to put the essential components in location and lead the advisory team to take action, and do it with aplomb and speed; the result of which would ultimately lead to the record $200 billion acquisition. But 1st Vodafone had to rapidly recover its composure from the initial shock of the Mannesmann move, and deliver a response urgently.
That response came in the type of an initial offer to purchase Mannesmann. This was rapidly rebuffed, with barbed statements becoming issued from their board of directors as well as the unions. It was reported that deputy chair of the Mannesmann supervisory board, Klaus Zwickel, described the action “brutal behaviour” and an example of “predatory capitalism, (which) aims only at short-term profits for the shareholders.” Likewise Schroder mentioned publicly that a hostile takeover would “damage corporate culture.”
Of course the mud slinging couldn’t only come from the German side. Hell hath no fury like nationalist pride, as well as the Brits had to get the metaphorical boot in too. And truth be told, they had every appropriate. The British press known as out the Germans as “nationalistic” and “hypocritical,” with Blair stating flatly in an interview, “we live in an European marketplace today where European organizations are taking over other European organizations, are taking over British firms, and vice versa.” This was undoubtedly the case with Mannesmann’s recent acquisition of Orange, somehow strangely forgotten amongst their storm of vitriol.
To be fair, not all of Mannesmann’s leaders saw the move from Vodafone as a threat to national interests. The company’s group chair, Klaus Esser, saw the scenario for what it was: a set of economic decisions that are an intrinsic component of the organization landscape. Add to this the supreme irony that the hysterics on the German side about losing their ‘national business,’ were created doubly ridiculous by the truth that 60% of Mannesmann’s shareholders had been foreign anyway.
Vodafone, in the end, was able to make an offer that couldn’t be refused and so became the new owner of Mannesmann. The case is an intriguing one due to the fact it highlights the complicated relationships involved with multi-national partnerships, and ones with perhaps various economic paradigms – the Germans practicing what they believed to be an a lot more ‘social economic’ program, which in reality is arguable also. Nonetheless, this acquisition is substantial due to the inherent drama of the case, the political wrangling, as well as the balletic ability of some of its key players to speedily and efficiently resolve a very tricky and urgent scenario. Causes that continue to make this 1 of probably the most talked about and well-known acquisitions in organization history.
Amanda Lisin is a veteran writer and journalist primarily inside the fields of finance and business, focusing on the US and European markets.
Her background as an in-house writer for leading newspaper publications in the past lead her to grow to be a freelance writer and commentator also a standard guest on television as an professional analyst inside the field.
To find out more please visit http://www.scott-mead.co.uk/