international mergers and aquisition

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.

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.