There is no such thing as a merger of equals!
On May 6, 1998 the largest merger in automobile history was heralded as “A Merger of Equals” and promised to propel the new DaimlerChrysler as a leading player in the global marketplace. The deal was valued at $38 billion and created the 5th largest global automobile company.
The “honeymoon” lasted just three years and during that time the stock of DMX fell off the cliff. In 2007, Daimler sold Chrysler to a private equity firm for $7 billion! A $31 billion loss, not to mention the costs of lost momentum in the marketplace and the human costs of derailed careers.
Here’s some of the behind the scenes truth about this so-called “merger of equals”. Between 1998-2001, Chrysler was neither integrated or granted equal status, and early on top executives from Daimler in Germany moved to Detroit to run Chrysler, prompting an exodus of key Chrysler top management.
In the autumn of 2000, DaimlerChrysler CEO Jurgen Schrempp stated publicly, in the German newspaper Handelsblatt, that he had always intended Chrysler to be a subsidiary of Daimler. “The merger of equals statement was necessary in order to earn the support of Chrysler’s workers and the American public, but it was never reality.”
And the same tune gets played over and over. Sprint – Nextel, United – Continental, Glencore – Xstrada, Omnicom Group – Publicis Groupe. Most times this scenario seems more like the mating of two dinosaurs, noisy and messy, but destined for extinction.
The creation of customer and shareholder value following a merger takes real leadership courage, not PR and fancy promises.
When you hear the words “merger of equals”, grab your wallet and run!
Tight Lines . . .
John R Childress