when rivals merge

8/13/2019 When Rivals Merge ..

1/18

When Rivals Merge, Think

Before You Follow SuitBy

Thomas Keil and Tomi Laamanen


2/18

Abstract

Theme of Article

Reasons of Poor Performance by followers

Alternative Responses

Choosing the right response

Conclusion


3/18

Merger

Combination of two or more business enterprises

into a single enterprise.

Example:

Sony + Ericson = Sony Ericson


4/18

Acquisition

Acquisition is the process through which one

company takes over the controlling interest of

another company.


5/18

And the Article begins

When Rivals merge, think before

you follow suitSelf Explanatory

Instead of Just Following,

Respond Carefully !

.


6/18

M & A Domino Effects

With the execution of Merger or Acquisition by

a Major Rival, other companies feel

Under Attack!


7/18

Acquisitions taking place.

Ericsson acquired MarconisTelecommunication (2005)

Alcatel and Lucent merged (2006)

Nokia and Siemens combined equipment units(2006)

One Objective:

Keeping their Pace with Ericsson


8/18

Ericsson

(Swedish telecommunications equipment maker)

Remained Todays Undisputed market leader

While other companies :

Failed to seize Ericsson Exposed to HuaweisAttack

Emergence of Apples iPhone & Googles

Android OS

Same path, does not lead

everyone to their Destination !!


9/18

Thomas and Tomi Suggested:

Companies that react to a rivals merger with a

head-on merger of their own, frequently

Display

Poorer Performance

than companies that carefully develop a less

direct response.


10/18

Reasons for Poor Performance

1. Managers under pressure to act quickly

2. Overvalued transactions due to large number

of bids

3. Get less-optimal targets.


11/18

If not This, than What?

1. A Strategic Retreat

2. An Oblique Maneuver

3. A String of Pearls

Acquisition Strategy

Alternative Responses


12/18

A strategic retreat:

If the merger attack isnt in your main market,consider retreating to your core market rather

than diverting valuable resources to protect a

marginal one.


13/18

An oblique maneuver:

Sometimes you can obtain more advantage byturning to innovation and organic growth.


14/18

A String of Pearls Acquisition

Strategy:

Instead of Huge M&A in order to match therivals deal, go for Small acquisitions. (like

SAS institute, Novartis & Microsoft) .


15/18

Winning the Battlebut Losing

the War


16/18

Four Considerations

1. What is the Nature ofAttack?

2. Which are best suited

Strategiesto our particularcompany?

3. What are Required

Resources and Capabilities

for each strategy?

4. What critical execution

Challengeswould we face?


17/18

Concluded

Choosing the

Right Response,

to the Right Attack

at Right Time,

throughRight Resources.


18/18

Ended

for your Time and

when rivals merge

Documents