Critical success factors in mergers with specific reference to the Absa/Barclays transaction

De Villiers, Wilco (2008-12)

Thesis (MBA (Business Management))--Stellenbosch University, 2008.

Thesis

ENGLISH ABSTRACT: A number of studies analysing the success, or lack thereof, of mergers and acquisitions have been done in the United States and Europe. Very little is known about these transactions in South Africa. The aim of this study is to examine a successful South African acquisition transaction and to compare that to theory derived from findings in the United States and Europe. Barclays acquired 53.96 percent shareholding in Absa in 2005 for R29.7 billion, representing the biggest direct foreign investment in history in South Africa, and also the biggest investment by Barclays outside the United Kingdom. The envisaged R1.4 billion synergies were realised 18 months early, indicating that the integration of the two entities, Absa and Barclays, was a success. Research in the United States and Europe indicates that companies may consider investing in mergers or acquisitions for reasons such as expansion, market entry, economies of skill and scale, geographic motivations and financial reasons. Only market entry did not serve as motivator in the case of the Absa-Barclays transaction. Reasons stated for the success of the transaction correlate well with findings in the United States and Europe, including the prompt appointment of new leadership, the establishment of clear goals, a strong integration structure, well developed communication channels, addressing of cultural issues and active risk management. The only aspect that did not receive particular attention was a focus on the external client. Possible pitfalls that were negotiated successfully during the transaction include Barclays not paying too high a premium for the Absa shares, using the best suited financial structure, focussing on the implementation of the transaction, as well as merging for the right reasons.

AFRIKAANSE OPSOMMING: Daar bestaan ‘n hele paar studies wat die sukses, of gebrek daaraan, van samesmeltings of aankoop van maatskappye beskyf in die Verenigde State van Amerika (VSA) en Europa. Daar bestaan egter baie min inligting oor soortgelyke transaksies in Suid-Afrika. Die doel van hierdie studie is om ‘n suksesvolle Suid-Afrikaanse transaksie te vergelyk met teorie wat afgelei is uit resultate verkry in Europa en die VSA. Barclays plc het in 2005 beheer geneem van 53.96 persent van Absa aandele teen ‘n totaal van R29 miljard. Dit verteenwoordig die grootste direkte buitelandse belegging in Suid-Afrika in die geskiedenis, asook die grootste belegging van Barclays buite die Verenigde Koninkryk. Die verwagte R1.4 miljard se volhoubare sinergieë was behaal 18 maande vroeër as verwag, wat daarop wys dat die integrasie van Absa by Barclays suksesvol was. Navorsing in die VSA en Europa dui daarop dat maatskappye samesmeltings en aankoop van maatskappye oorweeg vir redes wat insluit uitbreiding van die maatskappy, die binnedring van nuwe markte, skaal en vaardigheids ekonomieë, geografiese motiverings, asook finansiële redes. In die geval van die Absa-Barclays transaksie was al die bogenoemde redes relevant, behalwe die binnedring van nuwe markte. Redes vir die sukses van die transaksie vergelyk goed met die redes gevind in die VSA en Europa; dit sluit in die spoedige aanstel van die nuwe leierskap, duidelik gekommunikeerde doelstellings, ‘n sterk integrasie struktuur, goed ontwikkelde kommunikasie kanale, adressering van kulturele aspekte, asook aktiewe risiko bestuur. Die enigste aspek wat nie aktief bestuur is nie is die fokus op eksterne kliënte. Moontlike struikelblokke geïdentifiseer in Europese en Amerikaanse studies, wat suksesvol bestuur is, sluit in dat Barclays nie te veel vir die aandeel in Absa betaal het nie, die gebruik van die regte finasiële struktuur, fokus op die integrasie proses asook samesmelting vir die regte redes.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/4393
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