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Factors Influencing the Success of Takeovers and Mergers

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Leadership is the main factor influencing the success of takeovers and mergers because Staff who has strong leadership skills will motivate and insipre other employees to achieve the goals and objectives of the firm. This is well illustrated in the acquisition made by Kellogg’s.

One of the key factors influencing the succes of Kellogg’s severals acqusition, was The CEO John a Bryant’s leadership skills as, he held direct responsibility for managing the planning and execution teams for the integration of Keeble Food Company in 2001, this has been a success takeovers in the short term and the long term as he has created many different synergies whose revenue synergy which was just under billion more.

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This has been made because Kellogg’s is driven by a democratic leadership approach as the company engage discussions with their employees before taking them implanted communication programm to empower his workforce.

The business believes in the value of the their employees and therefore rewards them for how well they perform.

This allows the firm to have a very motivated workforce and thus a very productive one, it also inspires them to work harmoniously with Keeble Food Company ’s employees and culture and produce synergies. Futhermore, this was the case in the Pringle’s acquisition by Kellog’s. Originaly Procter & Gamble wanted to sell Pringle’s to Diamonds but due to account’s problems, the deal failed. Kellogg’s responded very quickly to that and made an offer to the American company.

This show that the CEO of Kellogg’s has reacted very rapidly as he saw an huge opportunity for his firm to growth externally as this merger would help to achieve Kellogg’s objectives. This made John A Bryant having leadership skills as he took risks to enable his company to become bigger and more dominant. In the short term, Kellog’s again integrated Pringle’s perfectly, as the firm bought Pringle’s in 2012 for $ 2. 7 billions. In the long-term, the takeover should produce a saving cost synergies of 50 to 75 million. Another example of great leadership skills hich influenced the success of a takeover is showed by Chris Gent, CEO of Vodaphone, in the Mannesman’s takeover by Vodaphone in 1999.

As the german company bought Orange, UK firm, it directly made them a competion to Vodaphone. This Chris Gent did not agree and therefore believe that it was against an agreed understanding not to encroach on each other’s market. He therefore, wanted to acquire Mannesman. Chris Gent has persevered to takeover this firm even if the German public and government were against it and that The European Commission will scrutinize the deal for monopoly implications.

The German firm finally agreed after time for an offer of £112 billion. This exhibits, that Chris Gent played a key role in influencing the Mannesmann board to accept the deal and therefore implies that leadership skills such as convincing people to do something is vital and influence the success of a takeover or merger. In contrast, Randall Stephenson AT&T’s CEO has showed poor leadership skills in the deal for T-Mobile from Deutsche Telecom has collapsed due to high prices, less choices and less likelihood of new product development.

However, the CEO should have been more persistence, some real question marks over his leaderships were left. Leadership skills are essential to lead correctly a firm but there are several external and internals factors such as the time limit, short or long to take decisions or the economic environment, rapid or slow, that will determine which is one will be appropriate in one case may be unsuitable in another. However, there are other factors than leadership that influence the success of takeovers and mergers such as the type of integration in which the merger of takeover occurs.

The Motorola handset maker’s takeover by Google in 2012 is a great example, which exemplify that. Telecom and multimedia merge, so do the companies that provide these products, this are forward vertical integrations as these companies are in the same industry but the customer’s merger with the business. The takeover will give Google access to the intellectual property that Motorola has thought patents. This will provide future income and a basis for new product development as the firm will is Android operating system in Motorola handset.

This means will influence the success of the takeover as the two firms come from the same industry that they know which facilitates the integrations and safe times in the short term. Furthermore, Google are able to use the technology from Motorola to become more competitive and produce new products in the market, which is product development according to the Boston Matrix. This should make the company growth externally and therefore produce, in the long-term revenue synergies.

This point is amplified by the Microsoft’s partnership with Nokia, using their operating system on Nokia handsets to become more competitive and improved their products and increases their revenue. Another factors that influence the success of takeovers and mergers is having the same visions, objectives, and culture of both companies. The fact that both firms meet their objectives in the short term and growth with a mutual vision will influence the success of the takeovers of mergers.

The main objectives of Kellog’s were to have truly global snacks platform and to target asian market to increase their revenue from this market as ceareals are not very popular there. Pringle’s has a global footprint and should catapult them to the number two position worlwilde savory snacks category, and in US it will provides Kellogg’s a strong new sources of growht for the firm’s already strong presence in the sacks category. The same culture, vision, heritage of both firms have allowed the both workforce to work together to create in the short-term a smooth transition and in the long-term synergies.

To conclude, leadership is one of the main factors that influence the success of takeovers and mergers. Personally, I strongly think that is mainly in the short-term because in all examples above, it shows that the leadership skills appears very strongly in the negiotating of the mergers or takeovers as in the Vodaphone’s example, Chris Gent showed great presuasive skills which enabled his firm to takeover Manneslan in 1999 and to growth externally but leadership is very essential all the time too as it leads, inspire, set examples towards other members of staff to obtain the best of them and to take the best managing decisions.

The type of leadership, depends upon many different factors and must be different style according to different challenges that the any firms will face. However, there other factors that affect the success of takeovers and mergers , mainly in the long term, such as the type of integration or having the same visions, objectives and culture. The same intergration will make easier the transaction and allow more product development fo the firms which should create revenu synergy.

Having the same visions, objectives and cultures will allow the firm to facility the regroupment of the two workforces, for better motivation and therefore productivity. All succes of mergers and takeovers will depend upon how quickly it is been made and if all imporant factors, such as strenghts or treaths of the mergers or takeover, as in the swot analysis are taken into account before going ahead with the deal.

Cite this Factors Influencing the Success of Takeovers and Mergers

Factors Influencing the Success of Takeovers and Mergers. (2016, Oct 06). Retrieved from https://graduateway.com/factors-influencing-the-success-of-takeovers-and-mergers/

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