Industrial case study analysis of mergers and acquisition
1. Analysis based on industrial case study
PRESENTED BY
Namitha Sudhakaran
Roll no:178920
SOM- NIT Warangal
2. mergers and acquisitions that are taking place beyond the
boundaries of a particular country.
also termed as global mergers and acquisitions or cross-border
mergers and acquisitions.
They can be horizontal mergers, vertical mergers,
conglomerate mergers.
multinational corporations can enjoy a number of advantages,
which include economies of scale and market dominance.
The rules and regulations regarding international mergers and
acquisitions keep on changing constantly.
Companies have to be mandatorily update with this.
3.
4. The Rover Company was a British Car manufacturing
company founded in 1878.
BMW AG is a German automobile, engine and motorcycle
manufacturing company which began life as a aircraft engine
company in the early 1900s.
BMW acquired the Rover Company for ₤800mn , After
investing about ₤2bn and getting no synergies.
5. The primary among them was to grow.
Rover had acquired significant cost advantages due to its
association with Japanese production method.
low level of cost in the British manufacturing sector compared
to the costs in Germany.
over also has in its repository brands such as Mini and MG
Rover, which offered BMW the chance to exploit new markets
and segments.
6. acquisition was unsuccessful because they didn’t plan the
entire process well.
BMW’s integration plan-three-phase process
initial two years were ‘wasted’ in just providing financial help
without any integration
Fully integration done only after three four years.
The process are not communicated with low level people.
Lack of communication issue eventually delayed the
integration process.
7. There were also substantial differences between the
business culture of BMW and Rover.
German direct approach was in contrast to the more
relaxed approach followed by the British.
Financial calculations of BMW and its utilization was
not up to the mark.
BMW looks into only the technological advantage.
Ended up with no synergies.
8. AkzoNobel N.V is a Dutch multinational company,
specializing in coatings and speziality chemicals.
ICI was formed when four British chemical companies merged
in 1926. By 1970s, with a diverse variety of products ranging
from heavy chemicals to pharmaceuticals
9. Akzo identified that by acquiring ICI they should have
financial benefits and they can one of the largest coating and
spatiality chemical company
Some of the products of both the companies are same.
More geographical presence and highly attractive platform
Increased market space
Strategic synergy expected by akzo was €280mn.
Akzo paid 670p for each ICI share and the deal was finalized
for ₤8.0bn
10. That was a good strategic deal.
Its turn over increased 60% to that of its nearest competitors.
Company started offering offers an excellent complementary
fit, both in terms of geographical spread and in product mix.
acquisition has turned out to be successful with Akzo meeting
all the synergy targets in time.
Akzo initially set a synergy target of €280mn, which they
updated to €340 mn.
Reasons for success is the presence of a well-planned
integration plan and the rapid implementation of that plan
11. Unlike BMW, which took no steps to integrate Rover in the
initial two years
Akzo planned on a total integration in the first three years.
They were able to find a balance between the cultural and
linguistic differences between the two companies
they were thus able to avoid communication problems
They have a clear idea about financial planning synergy and
product also its marketing.
12. BMW made some key mistakes before going ahead with the
Rover deal .
Regarding the speed of integration, communicating and lack
of proper research.
Akzo, on the other hand, were well planned and their
integration was swift and effective.
They overcame the communication and cultural problem and
devised ways to create massive synergies for the company.
Lack of research on various factors.
13. characteristics for a successful integration process is a
comprehensive integration plan,
rigorous cost/benefit/risk management control mechanisms
dedicated leadership did exist in the deal.
The presence of the right mix of people and product.
The speed of implementation has to be there.
managers should be able to communicate properly their
intentions to the lower levels .
Proper research into the acquired company and its activities
are important for the firms before going ahead with their
merger plans
14. Akzo Nobel Corporate Media Relations. Recommended Cash Offer for
Imperial Chemical Industries plc. by Akzo Novel N.V.; Akzo Nobel
Press Release, 2007.
Andrade, G., Mitchell, M. & Stafford, E. New Evidence and
Perspectives on Mergers. The Journal of Economic Perspectives
2001,15, No. 2:103-120.
Banal-Estañol, A. & Seldeslachts, J.: Merger failures. WZB, Markets
and Political Economy Working Paper No. SP II 2005-09 2007.
Batchelor, J. Employment security in the aftermath of the break-up of
the Rover Group. Unpublished, 2001.
Brealey, R.A., Myers, S.C. & Allen, F. Principles of Corporate Finance,
8th edition. McGraw-Hill; 2008.
Carleton, R.J. Cultural due diligence. Training 1997, vol 34. Page
No.67-80.
