Collection of Mergers and Acquisitions and Integration case histories from my first-hand experiences at GE, Fiat, Indesit, Corus, Areva, with lessons learned

1. POST-MERGERS INTEGRATIONS:
CASE HISTORIES PRESENTED BY FRANCESCO PICCONI
MERGERS & ACQUISITIONS
EXECUTIVE MBA PROGRAM
MIP SCHOOL OF MANAGEMENT
POLITECNICO DI MILANO
MILAN, MAY 7th, 2009

2. CASE HISTORIES OBJECTIVES
 Introduce some selected case histories of
post-merger integrations from an organizational and
human resources perspective
 Highlight and discuss lessons learned
Each case history is presented in terms of:
•Case Description
•Post-merger integration changes
•Post-merger integration approach (organization&HR)
•Lessons learned

3. CASE HISTORIES SUMMARY (1)
M&A INITIATIVE MAIN IDEA
Battle of cultures
How a major “giant” U.S. Corporation with
a leadership driven culture integrates an
acquires excellent Italian company with a strong
technological leadership and a technology
Nuovo Pignone driven culture
Retaining the key people
and How an Italian global multinational (part of
FIAT group) with an overall “light” culture
retains the key people coming from a
create a JV
German technology-driven multinational
with a strong culture

4. CASE HISTORIES SUMMARY (2)
M&A INITIATIVE MAIN IDEA
Coping with failure
How an Italian industrial organization
(part of FIAT group) tries to integrate
downstream a financial service French
acquires
family-owned company and is forced
to re-sell because of both group financial
crisis and culture clash
Organization dis-integration
How a UK national leader, after being
acquires sold by GE, is “unpacked” and absorbed
by an Italian aggressive multinational
which in turn valorizes its brand

5. CASE HISTORIES SUMMARY (3)
M&A INITIATIVE MAIN IDEA
The sleepers
It’s not a must to integrate: a
large UK-based multinational (now
part of TATA steel) decides not to
acquires
integrate a mid-sized French
company after many years from
the Acquisition.
The technological nuggets
T&D How a French multinational
acquires integrates and develops two Italian
mid-sized family-owned companies
with a strong technological
potential
VEI Electronic Industries

6. GE ACQUIRES NUOVO PIGNONE (1)
WWW.GEOILANDGAS.COM
CASE DESCRIPTION
In 1993 GE Power Systems acquires from ENI the company
Nuovo Pignone, the global leader in turbines, compressors and
services for oil&gas and power generation applications. At that
time, Nuovo Pignone had about 5,000 employees basedically in
Italy and 2,2 BN $ sales. Later, GE built a stronger organization
around Nuovo Pignone, after an impressive round of global
acquisitions in machinery & services for oil&gas applications.
Today, renamed GE Oil&Gas, it has 10,500 employees and 5,9
BN $ Sales.

7. GE ACQUIRES NUOVO PIGNONE (2)
POST-MERGER INTEGRATION CHALLENGES
Battle of cultures: how a major “giant” U.S. Corporation with a leadership
driven culture integrates an excellent Italian company with a strong
technological leadership and a technology driven culture
POST-MERGER INTEGRATION APPROACH (ORGANIZATION&HR):
 Put GE people (expats and Italians) as CEO in Finance, Legal, HR,
Quality and Purchasing, but leave in the first period local Italian
Management team in the core functions: Sales, Technology, R&D
and Industrial
 Start immediately to identify young Italian second-line managers and
middle managers to be “converted”, trained and prepared to replace
Senior Management in max 1-2 years in the core functions, and can
later become “pioneers” on their turn when GE acquires other
companies in the oil&gas business
 Introduce a process-driven mentality facilitating interchangeability of
people in key positions

8. GE ACQUIRES NUOVO PIGNONE (3)
LESSON LEARNED
 If you don’t know deeply the business, then send few people
in the Top Management and in the “governance” functions
(finance, legal, HR), but leave initially the existing managers in
Operations, in order to secure continuity while you better learn
the business, the customers and the employees
 Work immediately on succession plans, identifying and
preparing the new leaders for the future
 Send some of the future leaders abroad for a period to let
them interiorize the new culture
 Work on changing the culture from day 1

9. Magneti Marelli and Robert Bosch
create JV AUTOMOTIVE LIGHTING (1)
WWW.AL-LIGHTING.DE
CASE DESCRIPTION
In 1999 a 50%-50% JV was created by managing together the car lighting business
of the Italian multinational Magneti Marelli (mainly Carello), the automotive
component business of FIAT Group, and the lighting division of the German
component maker Robert Bosch, to create the global n.2 player in the automotive
lighting business. The aim was to put together two complementary market
strenghts in the high-tech, high price segment (R. Bosch) and in the mid-tech, price
sensitive segment (Magneti Marelli).
In 2001 Magneti Marelli acquires the Italian rearlamps maker Seima and merges it
with Automotive Lighting, thus reaching 75% and 100% in 2003.
At the time, the new company had about 8,500 employees worldwide and 1 BN
Euro Sales turnover. From a people standpoint, the main emergency in the first 2
years has been the risk that the key ex-Bosch people could go back to the “big
mother” Bosch, as all Bosch sites are normally co-located. In the due diligence
phase, a clause to prevent all employees from going back to the mother
companies, had not been stipulated.

10. Magneti Marelli and Robert Bosch
create JV AUTOMOTIVE LIGHTING (2)
POST-MERGER INTEGRATION CHALLENGES
Retaining the Key people: how an Italian global multinational (part of FIAT
group)
with an overall “light” culture retains the key people coming from a German
technology-driven multinational.
POST-MERGER INTEGRATION APPROACH (ORGANIZATION&HR):
 In the first year, while a 50%-50% JV, Magneti Marelli launched a global
campaign to identify the 100 ex-Bosch key people at any level in the
organization and to assess who could be culturally “converted” to the
new organization.
 For these people, an individual channel of communication was opened
and a retention plan (future promotions and salary increases) could be
communicated to them.
 “Lobbying” activity with Robert Bosch to prevent “poaching” from
Automotive Lighting these key people and to convince them to stay with
the new JV.
 Launch of a large scale communication campaign (house organs,
specific initiatives) to create a sense of common culture among all
employees.

11. Magneti Marelli and Robert Bosch
create JV AUTOMOTIVE LIGHTING (3)
LESSON LEARNED
 Spend time and money in the due diligence process
 In the due diligence, include an interview with senior managers, to
early assess their motivations and their criticality to business success
 Put safeguard clauses on employees, banning the seller form hiring
them for a minimum of 2-3 years without prior agreement, even if
they, in that period, join a third company
 Keep cultural stereotypes in mind in order to find ways to overcome
them…
 Identify early the new leaders and open a direct channel of
communication with them, sharing career and (why not) salary
perspectives
 Communicate the new culture heavily…it is often a matter of bringing
our fears from “the belly” to “the head” and rationalize

12. IVECO ACQUIRES GROUPE FRAIKIN (1)
WWW.FRAIKIN.COM
CASE DESCRIPTION
In 2001 the Italian multinational IVECO, the truck business of FIAT
Group, acquires the French family company Groupe Fraikin,
active in multi-brand leasing and renting of industrial and
commercial vehicles, and merges it with its financial services
business (financing and leasing of IVECO trucks). At that time,
Fraikin had 2,500 employees in Europe and about 500 MN Euros
sales turnover. After some attempts to bring the service-led Fraikin
in the structured industry-led culture of IVECO, and in particular
following the financial crisis of FIAT Group in 2002 which imposed
a drastic cut of gross debt, Groupe Fraikin was re-sold to the
French investment company Eurazeo.

13. IVECO ACQUIRES GROUPE FRAIKIN (2)
POST-MERGER INTEGRATION CHALLENGES
Coping with failure: how an Italian industrial organization (part of FIAT
group) tries to integrate downstream a financial service French family-
owned company and is forced to re-sell because of both group financial
crisis and culture clash.
POST-MERGER INTEGRATION APPROACH (ORGANIZATION&HR):
 IVECO appointed the former CEO of Groupe Fraikin as MD of its
whole financial service business. Same for the CFO, while the HR
Director was moved to the new headquarters in Paris.
 Operations were never really integrated.
 HR was left basically with the responsability of driving the people
integration, with little commitment from both the IVECO top
management and the Fraikin top management.
 The sudden financial crisis of FIAT Group in 2002 did the rest…

14. IVECO ACQUIRES GROUPE FRAIKIN (3)
LESSON LEARNED
 Events apparently far from the acquired context (F.I. crisis of
car business of FIAT in 2002) can dramatically impact and
change perspectives in the business acquired
 Don’t feel necessary forced to integrate cultures in the short
term…But if you choose to do that, be consistent and do it
seriously
 Don’t let HR manage integration! Top managers should do
that

15. INDESIT COMPANY ACQUIRES
GE HOTPOINT (1)
WWW.INDESITCOMPANY.COM
CASE DESCRIPTION
In 2003 the Italian multinational INDESIT COMPANY (at that time named
Merloni Elettrodomestici) acquired from GE Appliances the UK-based
division GDA-HOTPOINT, national leader in household appliances.
GDA-Hotpoint had 6,000 employees, almost 1 BN Euros sales turnover
and a strong local brand. In 2005, Hotpoint was disassembled and its 5
plants largely reaggregated to the Indesit Company division. Several of
them have later been closed or are currently under closure. Today
Hotpoint has been developed in terms of sales force and service, and as
centre of excellence for the top-load washing machines. Today Indesit
Company employees about 17,000 people with sales turnover of 3,1 BN
Euros.

16. INDESIT COMPANY ACQUIRES
GE HOTPOINT (2)
POST-MERGER INTEGRATION CHALLENGES
Organization dis-integration: How a UK national leader, after being sold
by GE, is “unpacked” and absorbed by an Italian aggressive
Multinational which in turn valorizes its brand.
POST-MERGER INTEGRATION APPROACH (ORGANIZATION&HR):
 Indesit initially moved to the UK a small team, including the new MD,
the Finance Director, the Operations and R&D leaders, to get a better
understanding of the industrial footprint.
 Later, Indesit reorganized the activity, downsizing heavily and moving
production largely to the East Europe, strenghtening the sales and
the service organization.
 The future…Will Indesit Company be re-named “Hotpoint”?

17. INDESIT COMPANY ACQUIRES
GE HOTPOINT (3)
LESSON LEARNED
 Have clear in mind what you want to achieve from an
acquisition (a market, access to technology, a service
organization…)
 Take the time to understand the new organization before
reorganizing it
 Once you get a good grasp of the acquired company, act
swiftly and consistently
 When you have to change the organization, “unfreeze” the
status quo, then “cut” and then quickly “freeze” again. Don’t let
organization change drag on and on for months.

18. AREVA T&D ACQUIRES
PASSONI&VILLA SPA and VEI SPA (1)
WWW.AREVA.COM
T&D VEI Electronic Industries
CASE DESCRIPTION:
In 2007 AREVA T&D, the Transmission&Distribution Business of
the French multinational AREVA, acquired Passoni&Villa SPA and
VEI SPA, two mid-sized Italian companies, from the founders or
their families. In both cases, the acquired companies have a
global leadership position (N.3 worldwide) in high voltage
insulators (Passoni&Villa) and some medium voltage products
(VEI). The aim of AREVA T&D is to make of both companies a
Centre of Excellence for the Group, and to expand significantly the
capacity, particularly with Joint Ventures and start-ups in China
and India.

19. AREVA T&D ACQUIRES
PASSONI&VILLA SPA and VEI SPA (2)
POST-MERGER INTEGRATION CHALLENGES
The technological nuggets: how a French multinational integrates and
develops two Italian mid-sized family-owned companies with a
strong technological potential.
POST-MERGER INTEGRATION APPROACH (ORGANIZATION&HR):
 As in these family-owned companies the managerial and talent
pipeline is often dry, AREVA T&D started by securing and
“converting” the GM, one of which later retired to be replaced by a
reputed Swiss external new GM.
 In one year the Management Team of both companies has been
rebuilt with external managers, or Italian Areva T&D managers
previously based in France.
 A “not without you” approach has been chosen, persuading the
former senior managers, to stay with AREVA T&D, by accepting to
report to external new managers with multinational culture.

20. AREVA T&D ACQUIRES
PASSONI&VILLA SPA and VEI SPA (3)
LESSON LEARNED
 Work hard to identify the “technological nuggets”: companies
not necessarily big who own a unique product or technology.
Then develop them into a bigger context.
 Trying to keep the existing senior managers on board can be
the best option. If necessary, persuade them to accept a
different role in which they can bring their technical
competence and market knowledge.
 Keep in mind that family-owned entrepreneurial companies
have often a more practical and less burocratic management:
this is frequently a strenght point.