LONDON. Some multinational companies recently selected the options of acquisition and merger to expand market network, as well as to control operational costs through efficiency programs. The companies adopted the strategies amid the slow global economic growth.
The British based cigarette producer British American Tobacco (BAT) sees to acquire the majority shares of the Reynolds American Inc. The 57.8% Reynolds stocks are worth for US$47 billion or equal with around IDR611 trillion.
As reported by Reuters on Friday (2/10), the acquisition will lead BAT and Reynolds to be the largest cigarette companies in the world. Reynolds itself is the second largest cigarette company in the US after Philip Moris International. Last year, Reynold just spent US$25 billion to acquire its competitor in the US, namely Lorrilard Tobacco Company.
BAT acquisition over Reynolds is a gateway for the British cigarette company to compete with Philip Moris in the US market. Furthermore, the acquisition may save operational costs. The management of BAT estimates that after acquisition the company may save US400 million.
After British Exit (Brexit), the share price of BAT in the British stock exchange has hiked significantly, due to the speculations on poundsterling depreciation. The poundsterling depreciation is expected to boost BAT’s incomes in overseas.
As of September 2016, BAT recorded a 8.1% increase in income compared to the same period in 2015. The management BAT said that the company’s financial performance will benefit from the poundsterling depreciation.
Consolidation also happened in global automotive business. Recently, Nissan Motor Co ltd acquired a worth of US$2.29 billion of 34% of Mitsubishi Motors Corp.
As reported by Reuters on Thursday (20/10), the acquisition will lead to significant synergy in two companies, mainly in terms of the purchasing of industry’s raw materials, as well as the factories utilization. Furthermore, the two companies will develop automatic driving technology and hybrid vehicles.
According to Reuters, the Nissan and Mitsubishi will save round US$25 billion of operational costs in every year after the acquisition.
Meanwhile, as reported by Bloomberg on Thursday (20/10) AT&T Inc and the media conglomerate Time Warner Inc see for a merger. The two companies set to create a new company with a jumbo market value. To date, Time Warner and AT&T have the values of US$65 billion and US$238, respectively.
In 2014, Chief Executive Officer (CEO) Time Warner rejected a worth of US$80 billion of acquisition from Twenty First Century Fox, while AT&T spent US48,5 billion to acquire DirecTV.
(Muhammad Farid/Translator)
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