Strategy - Growth: Introduction to acquisitions

Acquisitions are a source of significant change for businesses – both the business being acquired and the business doing the buying! What is an acquisition? Here is a definition:

Where one business acquires a controlling interest in another business

As you look through the business media you should come across many examples of acquisitions.  Here are some for you to look at:

March 2004: Buyer – WM Morrison
Target - Safeway
Price - £3bn

December 2005: Buyer – ITV plc
Target – Friends Reunited
Price - £175million

August 2005: Buyer – Adidas
Target - Reebok
Price - £2.1bn

June 2006: Buyer – Ferrovial
Target - BAA plc
Price - £10.3bn

December 2006: Buyer – First Choice
Target – Late Rooms
Price - £120million

January 2007: Buyer – Tata
Target - Corus
Price - £5.8bn

July 2007: Buyer – BSkyB
Target - Amstrad
Price - £125m

June 2008: Buyer – Tata
Target - Jaguar Land Rover
Price - £1.7bn

March 2009: Buyer – The Co-operative Group
Target - Somerfield
Price - £1.6bn

February 2010: Buyer –Kraft Foods Inc
Target - Cadbury plc
Price - £1.96bn

October 2010: Buyer – New England Sports Ventures
Target - Liverpool FC
Price - £300m

October 2010: Buyer – Reckitt Benckiser
Target - SSL International
Price - £2.5bn

March 2011: Buyer – Whitbread
Target - Coffee Nation
Price - £60m

May 2011: Buyer – Microsoft
Target - Skype
Price - £5.2bn

The type of acquisition made by a firm can be categorised in terms of its direction:

Different reasons for acquisitions

Direction

Explanation

Forward + vertical

Acquiring a business further up in the supply chain – e.g. manufacturer buys a distributor.  

Backward + vertical

Acquiring a business operating earlier in the supply chain – e.g. a retailer buys a wholesaler

Horizontal

Acquiring a business at the same stage of the supply chain – e.g. a manufacturer buys a competitor

Conglomerate

Where the acquisition has no clear connection to the business buying it

Here are a couple of examples of major acquisitions to help make the distinction above:

Example of horizontal integration - Adidas and Reebok

Example of vertical integration

Other Strategy Revision Notes:
Ansoff Growth Matrix | BCG Matrix | Balanced Scorecard - Intro Balanced Scorecard - Perspectives
Business Planning - Intro | Business Planning - Process | Writing a Business Plan - Introduction
Business Plan - Contents | Benchmarking |
Corporate objectives | Functional objectives |
Types of Change |  Change Management - Intro  | Change Management - Lewin 
Change Management- Barriers |Change Management - ImplementationCompetitive Advantage
Competitor Analysis | Core Competencies | CSR - Intro  | CSR - Issues  | CSR - BITC
Ethics - Introduction | Ethics - Issues and Examples |
Growth - methods of development | Acquisitions (Intro) | Acquisitions evaluation
Industry competition and profitability |
GE Matrix |  McKinsey Growth Model | Globalisation Intro | Globalisation Drivers
Mission Statements | Risk (Introduction) | Risk Management | Contingency planning
Business Objectives | PEST Analysis | Porter's Five Forces | Resources & Strategy |Seasonality
Strategic Audit | Stakeholders - Intro | Stakeholders - Interest & Power | Strategy & Marketing
SWOT Analysis | Value Chain Analysis | Vision | What is Strategy?
SWOT - Strengths | SWOT Weaknesses | SWOT Opportunities | SWOT Threats

 



 

 
 

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