Wednesday, May 16, 2007

Mergers and Marriages

Daimler’s shareholders have been desperate for the divorce papers to be signed. The unhappy union should be a warning to others: compatibility matters in business as well as love, and a happy wedding day is not a guarantee of a happy marriage.

FT.com / Comment & analysis / Editorial comment - Mergers, like marriages, fail without a meeting of minds.


As we see a rush of merger and acquisition (M&A) activity in the local market, it would be worthwhile to be reminded of the difficulty of making such transactions successful. It is said that mergers are triumph of hope over experience -the same applies to marriages some argue sarcastically. Despite experience that points to bleak outcomes, mergers continue in the hope of success. Such is the fate of Daimler Chrysler.


Daimler Chrysler tied the knot back in 1998 with a $36bn price tag for Chrysler. Few days ago this came to an end and the knot was untied at a price of $7.4bn. Separately some analysis shows that Daimler would not receive this amount and it will actually end up paying. This is a rude awakening to merger dreams. So before you tie the knot, business or otherwise, make sure you have a meeting of minds, without which mergers, like marriages, are doomed.


 


 

6 comments:

1001 Nights said...
This comment has been removed by the author.
1001 Nights said...

I still remember a professor mentioning something to the effect that despite all the merger craze mergers are usually UNSUCCESSFUL because they don't create the initially hoped for synergies. Guess the main winner here is the private equity firm that bought out CHRYSLER. I wish that a Kuwaiti firm had followed in Dar Listithmar's footsteps with Aston Martin and bought a chunk of that. Kuwait already owns some of Mercedes; with two Kuwaiti firms taking peices two other major car makers Kuwait would rule the driving world! Niyahahahahahaaa!! (joking :))

bu ziyad said...

nights: well kuwaiti drivers already think they rule the road :p

Deem said...

Do u teach economic lessons????? :P

Deem said...

I mean if u do,, let me know cuz I really need it :p mo??

bu ziyad said...

Deem: hehehe not sure id be good at it! I was saving it as a back up career :p