Who took over whom?
Jaime Luján Zilbermann
As we all wait on the outcome of Pilgrim's Pride attempted
take-over of Gold Kist, it would be an interesting exercise to take a look at
the actual practice of mergers and acquisitions.
As we all wait on the outcome of Pilgrim's Pride attempted
take-over of Gold Kist, it would be an interesting exercise to take a look at
the actual practice of mergers and acquisitions.
This has been an exciting year
worldwide in the M&A arena for poultry processors, as international
competition forces companies to look for ways to strengthen their business. A
clear example, although unsuccessful, was the
planned
acquisition of Perdigão by Sadia, both based in Brazil but with very large
international presences.
There's always the question of who benefits the most from
M&A's, or even if there is any benefit at all. However, it's sometimes more
interesting to consider who is taking over whom. Based on purely linguistic
terms, mergers would tend to be considered the joining of equals, whereas
acquisitions would tend to refer to a bigger company swallowing a smaller firm.
In financial terms, we know that this is not the case. Mergers occur when two or
more companies swap shares so that shareholders of the merged company remain the
same. For this to happen, all companies need to agree, which is why it is often
seen as consensual. On the other hand, in acquisitions, the shareholders of one
company become the owners of the shares of another business. However, this
clearly allows for a smaller company to take over a larger rival; the only
defining characteristic is who ends up with all the shares.
But (and there is always a but), businesses sometimes take
other measures that can leave one wondering, "Wait, so who took over who?" Such
is the case of the recent
acquisition of
Carolina Turkey by Buterball (or is it the other way around?) In
financial terms, it's clear that it was actually Carolina Turkey that took over
Butterball (which was part of ConAgra), thus becoming the largest turkey
producer in the US. But who ever heard of Carolina Turkey? Call me ignorant, but
certainly not me, which is just as well, because it is a name that will be
buried and lost somewhere in the history of poultry processing. But how could
this happen? Has the company not just become the largest turkey producer in the
US? Well yes, but as it turns out, Butterball is the most widely recognised
turkey brand in the country. It therefore made more sense for the people at
Carolina Turkey to change their company's name to Butterball after the
acquisition. So the question remains… who took over whom?
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