Page 4: Acquisition
There are a number of reasons for acquiring other businesses. The foremost is the speed at which it enables an organisation to respond to changes in its business environment and enter other product and market areas.
In many instances, particularly where heavy investment is required (e.g. engineering), developing a strategy internally would just not be practical since the process of internal development would be too slow. Acquisition is not only about factories and assets, it is also about knowledge and markets.
Buying a company can help a Group improve its research and development expertise so that it can meet the demands of a more globalised marketplace. Mergers and acquisitions in global markets also help to improve and broaden the range of products and services an organisation provides, whilst at the same time reducing unit costs.
The new strategic acquisitions made by Glynwed were designed to improve the strength of the core businesses of pipe systems and consumer and foodservice products. Thus the company could compete more successfully in growth markets worldwide. The parallel acquisition programme included:
For the pipe systems business, the acquisitions helped to create a better geographic balance for the Group. It has now became a world leader, supplying a wider range of complementary products with 45 manufacturing locations and 121 owned distribution outlets in 28 countries. Each acquisition added synergy to the Group, providing an expanded product range and global reach. Synergy is usually termed 1 + 1 = 3. It means that through acquisition, synergy occurs where activities or processes complement each other so that the combined effect is greater than the sum of the parts.
In the area of food service equipment the strategy strengthened the UK portfolio of brands and products, with synergies emerging from technologies such as blast chilling, electronic temperature control and high efficiency power units. The acquisitions also created a better framework for a more internationalised presence.