International Merger and Acquisition

Abstract

Merger and acquisition refer to the process where one company acquires another to help in improving its operations. The process leads to the acquired company adapting the control mechanisms of the acquiring company. One of the examples of mergers is the one between InBev and Anheuser-Busch. The success or failure of any merger depends on the human resource management of the merging companies.HRM has significant impacts on international mergers. They identify problems that may lead to problems after the merger and solve them in advance. They also ensure that all legal procedures are obeyed during the process. They identify the abilities of every staff in the merging companies thus ensuring that they are deployed to areas they have experience in.

Introduction

The term merger and acquisition usually abbreviated as M&A refers to the act of companies pooling their financial, and human resources together to improve their performance in a specific industry without coming up with a new business entity.

One company buys another or acquires another; mostly the bigger company buys the smaller company. The acquired company assumes the management procedures of the acquiring company but does not change its name. With different business organizations struggling to improve their performance, there have been numerous mergers and acquisitions. One of the recent mergers was between InBev and Anheuser-Busch. This paper aims to briefly describe the merger and giving the impact of strategic human resource management on mergers and acquisitions.

Merger between InBev and Anheuser-Busch

On July 14, 2008, InBev in conjunction with Anheuser-Busch issued a press release highlighting their merger. In the release, the two companies declared that they had agreed to come together and form the largest global brewer. The merger led to Anheuser’s shareholders earning $70 for every share. This averaged to $52billion. After the merger, the two companies agreed to use Anheuser-Busch InBev as their new name.

The move was collectively accepted by the board of directors from the two companies. InBev declared that it was ready to purchase all outstanding shares from Anheuser-Busch. The two companies agreed to use Budweiser as their brand name. The merger led to the establishment of the world’s leading company in the beer production industry and one of the big five companies in consumer products (Anheuser-Busch Companies, 2008, para. 2).

St. Louis, Missouri was made the companies headquarter where all its operations in North American regions were to be controlled. It was also named as the home for the company’s brand. As the company expected to engender most of its revenue from the United States, it had to depend on Anheuser-Bush staff that had a long time of experience in this market. Anheuser-Busch’s brand had also been familiar in the market due to its quality. Anheuser-Busch’s breweries in the United States were to be allowed to continue with their operations to facilitate the company attaining its objectives.

The former chief executive officer of InBev Company became the CEO of the established company after the merger (Anheuser-Busch Companies, 2008, para. 3-6). Former InBev’s board of directors retained their positions as the board of directors for the new company. In addition, the former president of Anheuser-Busch was included on the board. The integrated company also agreed to select an extra person from the previous Anheuser-Busch board of directors to join the new board of directors. On top of that, the new company’s management team was established from the former management teams of the two companies.

Budweiser, jointly with Stella Artois as well as Beck’s became the company’s worldwide brands controlling InBev’s extensive global track. The fact that InBev had a history of being capable of building brands globally coupled with Anheuser-Busch’s ability to build brands in America left the management certain that they would be able to acquire the United States market share. Additionally, the company believed that there was potential for it increasing its revenues by introducing the Budweiser brand globally.

This is because, in ten markets where InBev was the biggest brewer, the brand had not been launched while the company also had a good track record in nine of the markets where the Budweiser brand had already been established (Anheuser-Busch Companies, 2008, para. 8-13).

Impacts of strategic HRM on cross-border mergers and acquisitions

The success or failure of cross-border mergers is significantly influenced by the companies’ human resource management. This is because human resource managers have the responsibility of ensuring that all the stages involved during the merger process are successful. Before the merger, HRM ensures that all legal provisions are followed to the word by all the parties. These are provisions such as joint bargaining and equal opportunity.

It is the role of the HRM to come up with procedures to be followed during the merger process once the organization’s management shows an interest in merging with specific companies. It is responsible for looking for the most suitable compensation for the merging companies. Human resource management is found to play a significant role in the integration stage during the merger process (Aguilera & Dencker, 2004, pp. 1355-1370). HRM staffs are capable of identifying some vital problems which may in most cases be assumed by the management team only to cause problems at later stages of a merger or after the process is through.

One of the factors that lead to mergers and acquisitions not being effective is poor communication between the merging companies. In instances where two international companies intend to merge and the acquiring company has limited experience with merger requirements, it is the role of HRM to facilitate the process. In most cases, the staff of the company being acquired may have a negative impression of the acquiring company leading to the acquisition process not being successful.

To avoid such incidences, the acquiring company needs to have close contact with the acquired company. It is the role of the HRM to regularly communicate with staff from the company being acquired even before the process is over to create a perception that the acquiring company is concerned about them (Birkinshaw & Bresman, 2000, pp. 395-410). By HRM ensuring they regularly communicate with staff from the acquired company, they help in making these staff cooperate after the merger process is over.

To maximize the underlying potentials in a merger, there is a need to involve HRM in the entire process. The success of the merger depends on human resource management as it is responsible for establishing the strategies to be used. However, for many years, organizations have played down the impacts of human resource management in the success of cross-border mergers and acquisitions. International mergers mean that the new company has to cope with staff from the two merging companies.

It may be hard for the management to effectively utilize the resources at disposal of the new company. HRM plays a strategic role during international mergers where it uniquely allocates value to every activity in the new company thus being able to determine the right staff to deploy to every process (Birkinshaw & Bresman, 2000, 411-425). This helps the company maximally utilize the potential in its staff.

Conclusion

The desire by companies to extend their services to the global market has led to numerous mergers and acquisitions. Organizations overlook the impacts of HRM in international mergers and acquisitions. This is the reason why most mergers end up not being effective as expected. HRM plays a significant role during and after the merger process. HR managers identify all the problems of the merging process in advance and look for measures to mitigate them.

They also ensure that all legal requirements are observed by all parties to avoid problems occurring after the merger. By regularly communicating with the staff of the acquired company before and after the merger, HRM helps in ensuring that they cooperate in attaining the objectives of the company. This is because the staffs realize that the management of the acquiring company has their interest at heart.

Reference List

Anheuser-Busch Companies. (2008). Press release: InBev and Anheuser-Busch Agree to Combine, Creating the Global Leader in Beer with Budweiser as its Flagship Brand. Web.

Aguilera, R. V. & Dencker, J. C. (2004). The role of human resource management in cross-border mergers and acquisitions. International Journal of Human Resource Management, 15(8), pp. 1355-1370.

Birkinshaw, J. & Bresman, H. (2000). Managing the post-acquisition integration process: how the human integration and task integration process interact to foster value creation. Journal of Management Studies, 37, pp. 395-425.

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