Can a marriage between companies last happily ever after?
It’s summer and wedding season is in full gear! But beyond the bridezillas and the bonbonnieres, another kind of pairing requires just as much consideration in choosing the right partner: the corporate merger. In fact, some might argue that a corporate wedding requires even more planning due to regulatory filings, media fascination and ultimately, the number of lives (and jobs) that will be affected. But sadly, as we know, a wedding doesn’t necessarily guarantee a lifetime of bliss. Let’s look at a few famous corporate couplings and how they have fared...
1) A jug of juice, a chocolate croissant and thou…
Six months ago, Seattle-based Starbucks (NSQ:SBUX) decided that woman should not live on coffee alone and picked up a groovy little California juice company called Evolution Fresh. Though many analysts raised eyebrows at Starbucks once again veering away from its core business (to disastrous effect in 2000-2008), Evolution Fresh seems happy, with ready-to-drink bevvies at Starbucks and new standalone juice bars. Now, polygamous Starbucks announced it is acquiring La Boulange, a San Francisco bakery chain, to create a “national artisanal bakery brand”. Okay, that sounds like an oxymoron, but who can blame a mermaid for being unable to resist a flaky, buttery crust…?
2) Shall we chat?
The tech world was all in a tizzy last year when Skype announced it would merge with Microsoft (NSQ:MSFT), in exchange for the cool sum of $8.5 billion. Although Skype had 30 million users around the world, it was not generating a profit and experts tsk-tsk’d that Microsoft had way overpaid. Undaunted, Microsoft and Skype have set their sights on getting one billion users, while the big question remains whether Microsoft will ever get to the altar with Yahoo! (NSQ:YHOO) – a company it has been chasing around for years.
3) A match made in cartoon heaven
When Disney (NYSE:DIS) and Pixar merged in 2006, animated fireworks exploded in the sky, children all around the small world sang with joy and real hearts started to beat in the wooden chests of hand-carved toys. Well, maybe not, but Disney and Pixar were one of those couples that seemed destined for each other right from the start. The icing on the cake? This year, Disneyland (the ‘happiest place on earth’) made room for Cars Land (‘the cutest little town in Carburetor County’) as a tribute to Pixar’s blockbuster movie, Cars. Awww…makes your heart melt, doesn’t it?
4) Love at first sip
Canadians love their beer. However, it would seem that foreign brewery companies love our beer even more. Molson, Labatt and Sleeman remain the favourite and top-selling beers among Canadians, despite the fact that none of these Canadian-founded beers are owned Canadian companies anymore. In 1995, Labatt merged with the Belgian company Interbrew (which then merged with a Brazilian brewery and an American brewery to become AB InBev (NYSE:BUD). In 2005, Molson merged with US-based Coors to become Molson Coors (NYSE:TAP) and in 2006, Sleeman merged with Japanese-owned Sapporo Brewery. Remember Joe and his “I am Canadian” rant? Nah, neither do we…
5) A May/December media marriage
Back in the old days of the interweb (before grandma got her hotmail account), old school media companies raced around in desperation to find new media partners to help them look young, hip and no longer obsolete. In 2000, Time Warner (NYSE:TWX) merged with America Online (NYSE:AOL) in the biggest merger ever in American history. The $350 billion deal was seen as massively glamourous and an exciting blend of two companies from wildly different generations. Sadly, the tech bubble burst, AOL’s stubborn reliance on dial-up internet was put to rest, forensic accountants reigned down and the company’s stock dropped 80%. After finally admitting they had nothing in common, the companies split in 2009 - and then it was just LOL Time Warner.
6) Royal weddings
Getting swept away a prince isn’t just for Kate Middleton; it was also the fate of several Canadian hotels. In 2006, Canadian-based Fairmont Hotels was in danger of a hostile takeover the famously aggressive corporate raider, Carl Icahn. Then in swooped Saudi Prince Al-Waleed bin Talal bin Abdul Aziz Al-Saud and his Kingdom Hotels. Together he and a private equity firm called Colony Capital offered Fairmont $3.9 billion which they graciously accepted. But the Prince was not done with Canada. Kingdom then joined Cascade Investments (owned Bill Gates) in buying Canada’s other luxury hotel chain, Four Seasons Hotels, for $3.7 billion. Maybe he just wanted to make sure he has a place to stay when he’s in town.
So happy together
As you can see, the basis for a successful corporate merger is a lot like what makes marriages work: shared long-term goals and common values. When Starbucks chooses west-coast companies to buy, it is because they ‘get’ each other; they share similar cultural roots. When Prince Al-Waleed buys not one, but two, Canadian hotel chains, it is because he shares their vision for growth and sees the potential of the industry. When Disney and Pixar come together…well, we get Brave - the first female protagonist in a Pixar film and (finally!) a fierce new Disney princess we can be proud of!