What I observed during the merger:
I worked for AP Moller-Maersk (APM-M), the largest shipping company, during the time it acquired a competing company, the number four-ranked P&O Nedlloyd (PONL), for $4.7 Billion. I was transitioning between a fleet management role in the UK to a business development role working around Africa, so could appreciate a range of the impacts across the merged organization.
The PONL takeover came six years after the acquisition by APM-M of Safmarine, a Belgian-based Africa-focused shipping line, and a further three years after the acquisition of Sealand, a US-based shipping line. These two preceding acquisitions had been widely criticized for a perceived lack of communication, which lead to the attrition of talent from the acquired companies. Mindful of this, a conscious effort was made during the PONL takeover to roll out a comprehensive communications strategy, with national email blasts, town hall meetings, a global virtual Q&A forum and dedicated integration sites on the company intranet. While this addressed the issue of providing sufficient levels of information, since the full impact of changes weren’t immediately know to management, the transparency betrayed the degree of uncertainty surrounding the resultant integration, again leading to attrition of talent.
The motivation for the takeover was to leverage a combined asset base (ships and containers) to allow for an enhanced service offering to the combined customer base. Though PONL and APM-M operated in comparable trades the markets tended to be fragmented enough to allow for a good fit. Greatest friction was faced in Europe-Africa trades, where combined market share could approach 65% (leading to antitrust divestment requirements), and in Europe, where the headquarter functions for both PONL (London and Rotterdam) and APM-M (Copenhagen) were located.
The level of transparency afforded by the plethora of communications channels offered led to the realization that it was not clear how overlaps in the two organizations, particularly in Europe and Africa, would be addressed. Since efforts were made to ensure PONL employees that they would be treated equitably, APM-M employees were offered few assurances either. The result was that both sides in the transaction had little confidence that they had job security, and since this impacted so many in such a specialized labor market there was an urgency to secure a new job if possible. Subsequently, talent left for competition, from both APM-M and from PONL. It can perhaps be argued, perhaps harshly, that in some functions those left behind were the “dead wood” lacking the drive or ability to find a job with competing shipping companies.
• Clear and comprehensive communication strategy is essential in successful mergers/ takeovers, but there has to be a filter on what (and when) details are shared
• It is important to engage with employees of the acquired company but not at the cost of proven, valued employees in the acquiring company
• Measures should be taken to map talent (in both entities) to keep them in the new combined organization: ensure the right people stay on the bus
Submitted by Henry Pringle