The recent trends in expanding international business seems to be buying companies that have already established themselves in international markets. Last year saw Facebook acquire messaging company WhatsApp, or Novartis merge with GlaxoSmithKline. This year seems to be the banner year for mergers and acquisitions. According to Thomson Reuters, merger and acquisition activity surpassed $4 trillion, dominated by deals in the pharmaceutical / healthcare and technology sectors. Fewer companies are now dominating a growing number of sectors. Three recent mergers are disrupting their respective industries and leaving the future uncertain for competitors.
- Pfizer – Allergan
In one of the biggest takeovers in the healthcare industry, pharmaceutical giant and maker of Viagra, Pfizer, said recently that it is closing a $160 billion deal to merge with maker of Botox, Allergan. The merger would put together a combined $63 billion in sales and a product portfolio that includes Viagra, Celebrex, Botox, and the cosmetic treatment Juvederm. It would have 110,000 employees worldwide with global headquarters in New York and principal executive offices in Ireland.
- Anheuser-Busch In Bev – SABMiller
In a transaction that would combine the world’s largest brewers, Belgian based Anhesuer-Busch In Bev agreed to buy London beer maker SABMiller for $107 billion. The merger would account for 29% of the world beer market, making it three times bigger than its nearest rival Heineken, with just 9% market share, according to Euromonitor. AB InBev would be the biggest player in North America as well as Australasia, Latin America, the Middle East and Africa. AB InBev was attracted to the deal because it wants to grow sales in Africa and Asia through SABMiller’s brands.
- Marriott – Starwood
In what will create the world’s largest hotel company, Marriott agreed to purchase Starwood in a $12.2 billion deal. This decision is in reply to an increasingly competitive landscape where online travel providers and peer-to-peer services such as Airbnb have disrupting the industry and taking a significant share of margins. Marriott seeks to scale and seek a younger demographic to compete. Arne Sorensen, Marriott’s CEO, said “Today, size matters. To be successful in today’s lodging space, a wide distribution of brands and hotels across price points is critical.
Acquiring outside companies in the formulation and implementation of customer-oriented, global marketing strategies is a necessity for companies in the 21st century. Doing business today is the result of collaboration across country and company boundaries. Companies realize that today’s global marketplace requires a diversity of inputs. Those companies that have been able to manage successfully both across the geographic and competitive boundaries are the ones that are able to advance in today’s fast-paced business world.