International -- Readers Report
THE FACTS AND FIGURES IN MERGERS (int'l edition)
The figures presented do not support your story "The case against mergers" (Special Report, Oct. 30). The numbers show that 58% (145 out of 248) of the companies making acquisitions (experienced or inexperienced) did better than the industry average. In the big deals, 50% created some return or better (75 out of 150), while 50% experienced some erosion of returns or worse.
Mergers-and-acquisitions, as everybody knows, is a high-risk game. It is therefore surprising that the success rate is as high as it is. In several instances, the guidelines contradict the examples given. [Harvard University Professor Michael] Porter recommends "gap-filling" to strengthen the product line. That appears to be what Novell was doing with WordPerfect and what IBM was doing with Lotus Development, yet these companies are given as examples of what not to do. Acquiring a competitor is also recommended, but the merger between Price Club and Costco Wholesale Corp. is presented as a failure.
Laurens van den Muyzenberg