Mergers and Acquisitions: An Analysis of Six High-Profile Examples

|27 pages |01-07-2010 | | Not evaluated |
Price : €5.40

Presentation

Among the many strategies that a firm can use to develop and reinforce its competitive position mergers and acquisitions make it possible to rapidly and visibly increase a company's size, market share and portfolio of brands. This strategy also makes it possible to reach new markets and to be internationalized more quickly. The external growth also allows a company to diversify its activities and to acquire new competences and technologies which it would otherwise be costly, time consuming and difficult to develop in-house. Given the potential rewards, it is not surprising that the number of transactions has considerably increased over the past few years.

It is in this context that we will study some recent mergers (and some less so) and attempt to explain why some have succeeded while others have floundered.

Extract

1. What was the driver?
Air France:
Before the merger, in 2003, Air France was the national airline of France employing 71,654 people. The public company was owned by the French State (54%) and decided to diffuse a Public Offer of Exchange in order to acquire KLM.

KLM:
Before the merger, in 2003, KLM was the national airline of Netherlands and the oldest airline in the world still operating under its original name. It employed 30,118 people to run the company.
KLM was a private company and decided to seize the opportunity to take part of a group through the acquisition of Air France.

According to Pierre-Henri Gourgeon, executive managing director of Air France, the bringing together KLM Air France has a true strategic interest: “The air landscape moves quickly. There are not several options: or we advance or we are made asphyxiate. The fact of being together in Europe with KLM and also AI Italia enables us to consider new developments. The risk was of course that KLM joins One World rather than Air France and its SkyTeam alliance. ” While approaching KLM, Air France improves its potential of development and growth.

The aim of the acquisition was to become more competitive on the market; indeed KLM was an opportunity for Air France international growth. Their common objective would be to become the first European airline group relating to the number of passengers.

Thus, the corporate plan to determinate the future development strategy was based on the following:
- Consolidation of the air transport based on complementarity and synergies of services in order to develop their activity growth;
- Reduce operating costs
- Rationalize their maintenance
- Increase their market share
- From public to private… Results:

Air France belongs 81% of Air France KLM. The steps from public to private trend was the following:
In 2004, French State owned 44% of Air France KLM capital.
In 2007, French State owned 18% of Air France KLM capital.(...)

Mergers and Acquisitions: An Analysis of Six High-Profile Examples Mergers and Acquisitions: An Analysis of Six High-Profile Examples
Price : €5.40

Table of Contents

1. BP / Amoco merger
1.1 What was the driver?
1.2 Did they follow the organizational development principles? Options? Timing?
1.3 Did it succeed?
1.4 As an investment committee, would you have bought shares in the new business?

2. Rentokil, acquisition of BET
2.1 What was the driver?
2.2 Did they follow the organizational development principles? Options? Timing?
2.3 Did it succeed?
2.4 As an investment committee, would you have bought shares in the new business?

3. Daimler / Chrysler merger
3.1 What was the driver?
3.2 Did they follow the organizational development principles? Options? Timing?
3.3 Did it succeed?
3.4 As an investment committee, would you have bought shares in the new business?

4. GDF / Suez merger
4.1 What was the driver?
4.2 Did they follow the organizational development principles? Options? Timing?
4.3 Did it succeed?
4.4 As an investment committee, would you have bought shares in the new business?

5. Air France, acquisition of KLM
5.1 What was the driver?
5.2 Did they follow the organizational development principles? Options? Timing?
5.3 Did it succeed?
5.4 As an investment committee, would you have bought shares in the new business?

6. Thomson, acquisition of Reuters
6.1 What was the driver?
6.2 Did they follow the organizational development principles? Options? Timing?
6.3 Did it succeed?
6.4 As an investment committee, would you have bought shares in the new business?

Conclusion

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