GLOBAL CAPITALISM MEETS

NATIONAL SPIRIT

By:Kent CopelandEric HamiltonChase Luft Adam Stone

Part 1: Article Focus

Article Focus

Corporate managers use of discursive resources

Focused now on discursive strategies of actors involved in mergers & acquisitions

Usually focused on financial and economic aspects

Nordea

Major Nordic Bank Group Built through Mergers & Acquisitions

Includes Swedish, Finnish, Danish, & Norwegian financial services company

Forerunner for Mergers & Acquisition Acquisition of Christiania Bank og Kreditkasse

(CBK) Prolonged process Norwegian State held majors shares

Overview of Research on Mergers & Acquisitions

Strategic Perspective Focused on decision-making processes Used to attempt understanding management

Cultural Perspective Cultural differences & contradictions,

organizational justice, organizational politics, ambiguity, and gender

Societal Perspective Considered social movements or fashions Winners/Losers, Success/Failure of Mergers &

Acquisitions

Discursive Strategizing

Activating, Performing, & Connecting

Who are the Actors?What is important for them?

3 sources of legitimacy Rationalistic Discourse Nationalistic Discourse

Method and Data

Prolonged Acquisition of CBK by Nordea Initial offer in 1999 Mergers, then final acquisition in

October 2000. Final name change in early 2001

Intertextuality 3 Stages of Analysis

Part 2: Mergers and Acquisitions

Mergers and Acquisitions

Merita (Finland) and Nordbanken (Sweden)- Oct. 1997 formed MNB

MNB acquires Unidanmark (Denmark) in March 2000

MNB and U acquire Christiania Bank og Kreditkasse (CBK Norway) in Oct. 2000

New group called Nordea

Prolonged Cross-Border Acquisition

CBK is second largest bank in Norway CBK is State controlled (35%) Norway reluctant to give up control MNB initial offer of U.S. $2.7 billion in Sept.

1999 Labour Party took control of government

offices in March 2000 – initially rejected offers Four other banks showed interest in acquiring

CBK MNB’s 10th and final offer approved in Oct.

2000

Rationalistic Discourse

Three main arguments: Need for banks to grow and globalize Problems related to State ownership Synergies realized by the acquisition

Need for Banks to Grow and Globalize

Large banks provide services more cost-effectively and gain competitive advantage

Increases value of bank in market for shareholders

Nordic bank package is attractive target for future acquisition

Acquisitions are only avenue for expansion

Problems Related to State Ownership

Politicians in Norway can’t keep up with financial world

Norwegian government inefficient and slow

State ownership is old-fashioned and detrimental to development

Privatization is inevitable

Synergies Realized by the Acquisition

CBK could exploit the other bank’s competences and have better access to capital

MNB’s offer was referred to as a strategic fit

New Nordic bank group could draw interest from large continental European banks (particularly Dutch or German)

Nationalistic Discourse

Norwegian newspaper – “Norway is in danger of becoming a subsidiary district in Europe’s periphery”

Norway wants to maintain decision making power

Norwegian nationalism is strong – prevented telecommunications merger

Norwegians vs. Swedes

Norwegians viewed acquisition as a war with the Swedes

Norway as little brother being bullied by Big brother Sweden

Strong Norwegian patriotism

“Norwegian Attitude”

Indecisive, difficult, patriotic, and suspicious of foreigners

Post acquisition integration could be difficult

Prevent rational decision making Norway stayed out of the European

Union and Euro zone

PART 3: MAKING USE OF DISCURSIVE STRATEGIES AND

RESOURCES(Key Players)

Merita-Nordbanken (MNB)

Drew on and mobilized rationalistic discourse in justifying their series of offers for CBK

Objective was to secure rapid growth and market share in Norway and become the largest bank in the Nordic Countries

Attempted to appeal to Norwegian nationalist sentiments; welcomed the State of Norway as a shareholder

Emphasized both shareholders’ interests and Norwegian interests more generally

In favor of the acquisition

Christiania Bank og Kreditkasse (CBK)

Mobilized rationalistic discourse in the media in stressing the strategic fit between the banks, and the compatibility between the visions of the managements

Employees felt positive because MNB had no plans for layoffs

CEO Tom Ruud became entangled in nationalistic discourse in ways that were, at times, beyond his control

In favor of the acquisition

Den norshe Bank (DnB) DnB, the largest Norwegian bank, faced the

threat of increased competition in its domestic market

Supported a domestic restructure and offered to take over the struggling CBK

Top management drew from nationalistic and rationalistic discourses when looking after their intersts

Profited 200 million krone by selling its 9.98% share of CBK in the merger

Against the acquisition

Handelsbanken

Sought to prevent MNB, one of its toughest competitors, from becoming one of the largest banks in the Nordic region

Made offer to acquire CBK, but image of a distinctly Swedish bank was problematic in Norway

Once MNB’s offer was taken, CEO Arne Martensson drew n rationalistic discourse to argue the price had become too high (interesting note: Handelsbanken’s original offer was higher in numerical terms than MNB’s)

Against the acquisition

“Experts” (aka Financial Analysts)

The acquisition was about making money It was about pursuing an ideological

agenda whereby problems related to State ownership in financial institutions are solved

Argued that CBK needed to have more private owners in order to remain competitive

Nationalistic considerations are subordinated to rationalistic argumentation

In favor of the acquisition

Centre-right minority government

Consisted of the Christian Democrats, the Centre Party, and the Liberals and were in power in Norway until March 2000

Rejected MNB’s initial offer for CBK; wanted to secure Norwegian State ownership of financial institutions

Constantly drew on nationalistic discourse in the CBK case

Shifted their views of the acquisition after they lost power; wanted the State of Norway to only have a significant stake in the new bank

Ambiguous towards the acquisition

The Labour Party

The largest parliamentary party in Norway Used nationalistic discourse by hoping to

devise a national solution to the banking and financial sector

Decided to concentrate Norwegian State ownership in one financial institution, DnB, and agreed to sell CBK to the highest bidder

Rationalistic discourse was mobilized to justify the deal

Ambiguous to the acquisition

Part 4: Conclusion

International Industrial Restructuring

Focused on cross-border acquisitions Strategy development

Strategy Strategy = Language constructed to persuade others

to accept understandings and take certain actions

How do actors make use of discursive strategies/resources in public discussion in pursuing/resisting international acquisitions?

- Depends on position held

Financial/Economic rationale is insufficient- Combine rationalistic arguments with

nationalistic sentiments- Rationalize nationalistic arguments

Nationalism = Financial ends/obstructs others’

strategies

Rational Discourse (Media)

Cross-border acquisitions are taken-for-granted

Viewed as inevitable parts of global industrial restructuring

Gives voice to those arguing for cross-border acquisition

Caused by: corporate growth, competiveness, and efficiency

Usually reflects strategies, plans, analyses, or calculations when justifying viewpoints

Nationalistic Discourse (Media)

Can challenge rationale of international industrial restructuring

Is often emotional response Mobilized by those against cross-border

acquisition, and those with ambiguous viewpoints

Varies between countries involved… Built on relationship-specific social

identification Used to challenge or resist global capitalism

Discursive Strategies

Same actors can draw on different/contradictory discourses at different times

May draw on same discourses as opposition to solidify their position in a certain direction

Position can be taken out of context due to lack of control over publishing (hypocrisy)

Future Research Suggestions

Ability of actors to juggle with discursive resources over time

- Differing profiles of media outlets

The ways in which corporate executives handle variation of discourse between business press and the tabloids

- tabloids have negative/inverse effect

Dynamics involved in production of legitimacy in the media (things interpreted wrongly)

Intersection of business and politics remains under-researched