Business Week

I meant to post this over the weekend but as usually things came up and before I realised it was a Monday... then Tuesday!

Last week was hardly the best time to announce a merger yet Willie Walsh explained that the current burden of high-fuel costs and probable economic slowdown. This will create Europe’s 3rd largest airline after Air France-KLM and Lufthansa. So they say it is a merger – is it because each will retain its brand name and the airline industry has strong influence and government control. On the other fronts BA has an upper hand therefore clearly not a marriage of equals.

“The combined balance sheet, anticipated synergies and network fit between the airlines make a merger an attractive proposition, particularly in the current economic environment.” – Willie Walsh.

BA IBERIA
Pre-tax profits £883m £328m
Market Capitalisation £2.9bn £1.26bn
Destinations 75 Countries 44 Countries


Another Daimler-Benz/Chrysler union?

Hard times are known to put strain in relationships that was the theme this weekend I got from the wedding I attended. If only the couple can continue with the merry-making after the guest have left.

In the corporate world there is also that strain when it comes to mergers and acquisitions. Alcatel-Lucent transatlantic relationship has been struggling for a while the CEO (American Pat Russo) and Chairman (French Serge Tchuruk) were forced to step down. (Being an American in Paris is appealing at the cinema but it is a different ball game in the corporate world according to the FT) – it has been an unhappy relationship since the merger 2006 – no profits to show. A shining example of the argument that mergers rarely create shareholder value – market capitalisation is less than half what it was. Different cultures that have to be integrated is the obvious stand-out challenge – if given a chance to speak at a wedding I must remember to hammer this point home to both parties – meeting of minds is critical. One can only hope there departure means troubled times are also to be behind the merger.

All change!

With the changing guards at Vodafone I smiled when I read one shareholder was concerned about a comment the chairman had made about the relationship he had with the A. Sarin that they got on ‘like a house on fire’. Apparently it has a different meaning in India – I also don’t get it maybe I’m too sensitive like the Indians.