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For those who don’t already receive it,
there is a great (and free) business management resource,
www.workforce.com. On this Web site is
an article from the April 2005 edition of
Workforce Management
well worth reading. Entitled “Corporate Crunch,” the article
discusses how the relationship between multinational Unilever
and very independent Ben & Jerry’s Homemade Inc. has fared since
the former acquired the ice cream “iconoclast” in 2001.
Reading the
Workforce article, a person with seed industry experience would
no doubt think about the many mergers and acquisitions that have
occurred in this industry since the 1980s. Some relationships
have worked, but many have failed. Interestingly, the article
points out that only about 15 percent of all corporate mergers
achieve their financial objectives, and about half result in
culture clashes.
Given the
“anti-establishment” reputation that Ben & Jerry’s has had since
its formation, it would be easy to expect a culture clash with
its corporate parent. Yet, under Unilever’s ownership from
2001-2004, Ben & Jerry’s increased its global sales by 37
percent and tripled its operating margins. There have been
layoffs, but Ben & Jerry’s has retained its laid-back culture
which has appealed to its faithful customers over the years.
What has made
the relationship work is a bit of give-and-take from both sides.
As the article points out, Unilever did not ignore Ben & Jerry’s
biggest brand asset—the very fact that it was unconventional. At
the same time, with Unilever’s help, Ben & Jerry’s focused more
on financial realities and the bottom line.
All this
brings to mind a couple of seed industry acquisitions—the
Syngenta acquisition of Golden Harvest and Garst in 2004; and
Monsanto’s formation of holding company American Seeds, Inc.
(ASI), which acquired Channel Bio and NC+ Hybrids within the
last several months. Will these relationships wear as well?
If ASI allows
its companies to remain autonomous as it suggests it will, the
relationship could last. Interestingly, Aline Funk, Channel
Bio’s CEO, notes that Channel Bio enjoyed increased business
from a lot of its customers not long after it closed the deal
with ASI last fall. She added that Channel Bio was expecting its
biggest growth year ever, and that customers liked the fact that
Channel Bio was still going to “be around.”
Funk said that
remaining autonomous would help NC+ Hybrids, a well known name
in the western Corn Belt, as well. If the ASI relationship goes
well, customers will not notice a difference in the high level
of attention they had received before the change. Too many
times, mergers have resulted in layoffs and turnover and
customers have suffered the results of lost relationships with
representatives they have grown to trust.
At the end of
April 2005, Syngenta attributed a notable rise in its first
quarter sales mostly due to the acquisition of the Golden
Harvest and Garst seed businesses. Again in this case, the buyer
indicates it will allow the companies it purchased to operate as
independent brands, which is important to employees, customers
and the families who nurtured these brands over the years.
Syngenta also reported last year that Golden Harvest’s existing
shareholders would retain a financial position of significant
value in each of Golden Harvest’s five member companies.
Only time will tell how these relationships fare. Those who are affected by
layoffs and plant closings will have their own opinions. Others
who see the increasing costs of financing new technologies and
the continuing need to access deep research pockets will have
theirs.
Help with the
necessary capital to access and offer new technologies (biotech
traits and others) is one of the main reasons the industry has
seen the renewed flurry of mergers and acquisitions between the
big trait suppliers (with their huge capital resources and
research strengths) and regional seed companies (with their
brand recognition and close relationships with growers). Both
bring much to the table, and the table stakes are only getting
higher.
Again, those
who are affected personally will have their own opinions about
how these and future relationships fare—more mergers and
acquisitions will undoubtedly take place as both prospective
buyers and sellers take into account what it will take to
compete in the future. But, most important will be how paying
customers perceive and experience these “marriages.”
The
marriage between Unilever and Ben & Jerry’s, two disparate
companies, seems to be working and in that small percentage of
relationships that actually achieve their financial objectives.
It may be worth exploring why in greater depth and applying some
of those concepts in the seed business. There may after all just
be a few lessons to be learned from ice cream. |
