Skip to Navigation

Amitava Chattopadhyay


Amitava Chattopadhyay
Emerging Market Multinationals - Amitava Chattopadhyay



Question by Pengfei Sun on Apr 6, 2014

Q. How do we define a successful acquisition?

Image for Q&A

Your question had two parts and I am answering the first part here as I have not analyzed the potential Uniqlo – J. Crew deal that you referred to in the second part to your question. The answer to the success question really is deceptively simple. It depends on the goals the acquirer had for the company it acquired.  If the acquisition delivers on the reasons for undertaking the acquisition, it is a success.

In some acquisitions, the main goal is to acquire the acquired companies IP.  Thus, while LG Electronics never did much with the Zenith brand, LG Electronics insiders will tell you that the TV patents that Zenith owned more than justified the acquisition of the company.  The same could be said about Apollo Tyres‘ acquisition of Dunlop Africa.  They wanted acquire the manufacturing capability for radial tyres to enable them to expand under the Apollo brand name.  Tata Tea on the other hand acquired Tetley for the brand and to move in to the branded beverage business where margins were far higher.  Today Tata Tea has sold off most of its tea estates and has re-branded itself as Tata Global Beverages.  Clearly, another successful acquisition.

But, not all acquisitions are successful.  Thus Geely‘s acquisition of Volvo has been a difficult one.  The company has struggled to sell Volvo cars under the new management.  One could also look at TCL‘s acquisition of Thompson and say that was not successful.  The acquisition almost destroyed TCL.  In that acquisition, the goal of the acquisition was to acquire the Thompson name and the rear projection TV technology in which Thompson was a world leader.  Sadly for TCL, their prediction that rear projection TVs would be the next big thing in TVs did not pan out.  The market moved rapidly to LCD and plasma TVs, leaving TCL with a technology that was not salable.

So, to judge whether an acquistion is successful, you need to understand the original goal that the acquirer had, and then judge if the acquisition helped them reach the desired goal. Tata Tea we can say successfully acquired Tetley.  TCL on the other hand was unsuccessful with its acquisition of Thompson.



ASK AMITAVA: Other Q&A



THEMES

 
 
 
 
 
 
 
 
 
 
 
 


SHARE


 

Your email address will not be published. Required fields are marked *


Recent Tweets



Sat, 14 Dec @ 01:08 am

Completely moronic request by a moron who has been given power by still another moron who was elrcted by??? "Kennedy’s Lawyer Has Asked the F.D.A. to Revoke Approval of the Polio Vaccine"

Thu, 21 Nov @ 01:13 am

Uh Oh! Will #PMMODI throw #GAUTAMADANI under the bus? US too important to mess with. "Gautam Adani charged in US over alleged $250mn bribery scheme" via @FT

Fri, 18 Oct @ 03:39 am

Hello #Modi, what now? Not so easy when US gets into the game! "U.S. Charges Indian Official in New York Assassination Plot"

Sun, 22 Sep @ 04:05 pm

Brought down a peg or two, ey, #ElonMusk? "Elon Musk complies with Brazilian court’s legal demands for X" via @FT

Wed, 18 Sep @ 02:39 am

Two of a kind. Sadly, no surprise. "Live news: Donald Trump says he will meet India’s Narendra Modi next week" via @FT

Sat, 14 Sep @ 08:14 pm

#SkyTeamLounge at Vancouver. The sheer incompetence of screening this morning left me flabbergasted! 10 minutes of fiddling with each passenger's boarding card to check them in. Seriously, this is 2024! Should be smooth and automated. Given long queue, we never made it!


  Close AboutPapersCasesBooksTeachingMusingsMediaGalleryAsk Amitava