Editorial PROCESS WORLDWIDE 4/2013 Stairway to heaven
Do you remember the time when we thought that the way to expand one’s business was simply to work hard? Happy customers, aggressive marketing and honest toil were praised as the keystones of success. “It’s a long way to the top if you wanna rock ‘n’ roll!” — and yet, there might be a shorter way.
When looking at successful companies, most of them will — at one point or another in their history — have grown by simply buying into a successful business model. Growth through acquisition. And why not? Even the shooting stars of the internet-industry like Google are swallowing up companies galore. Your garage next door ‘start-up with a clever idea’ could tomorrow well be part of a global-megacorp. Only some weeks ago, the automation industry witnessed a union of giants, as French Schneider placed a multi-billion offer for British based Invensys. Schneider was the last in a long list of possible buyers like ABB or GE, and after Siemens had bought Invensys’ railway systems division earlier, it was about time to get serious.
So, Siemens divided, Schneider conquered? The plans of the French electricity and automation specialists are simple: With the strong electrical services supply arm, Schneider would nearly be able to compete with the business’ top-dogs ABB and Siemens. But the price was high: The five-billion-dollar bill that Schneider-CEO Jean-Pascal Tricoire accepted is around 14 percent above Invenys’ market value. Too much for a company that was already turned down by several others? Tricoire would certainly disagree, and he could be right: The strong power solutions and industrial automations branch would complement nicely to Schneider’s portfolio, analysts believe. The synergetic effects that the two different companies have could be in the several hundred million euro range, Schneider expects.
“There’s a lady who’s sure, all that glitters is gold …”, Led Zeppelin once sang— In the end, it all boils down to wether you can profit from synergetic effects. There’s no use in just buying into a nice technology, if it doesn’t fit your portfolio (as it is the wrong sector or you already market a competing solution). But, in Schneider’s case, the acquisition might be just the shortcut to success we thought is inexistent.