Here are some significant mergers and acquisitions which are going to impact the industries they are in. Click on the brands in bold to see their profile in ALF:
Virgin Media and O2
The highly anticipated merger between Virgin Media and O2 is still on course to be completed this year according to Virgin Media’s parent company.
O2’s proposed £31bn tie-up with Virgin Media would accelerate investment in telecoms infrastructure and bolster the UK’s post-pandemic recovery. The mobile network’s boss has said that the merger will create 4000 jobs, which will see O2’s marketing team grow; and that it will also provide new regions with ‘gigabit networks’ and cover more than 100 towns and cities by the end of 2021, which will create opportunities for new product offerings and increase marketing spend.
The combination of O2’s mobile infrastructure and Virgin Media’s cable network would create one of Europe’s largest telecoms organisation, powering communications for nearly 40 million subscribers. Consolidation would also result in £6.2bn savings and provide the scale and capability to rival BT and Vodafone in the converged networking services field.
Although O2 recorded a drop in revenue for the first time in five years in the UK, it still increased its margin during the same period despite the impact of Covid-19. Rivals Sky and Vodafone have objected to the merger on the grounds that it could reduce competition in the market for “virtual” operators leasing capacity on a mobile network to offer their own services.
The world’s fourth largest oil and gas company - which is looking to diversify its investment strategy and claims to be targeting carbon neutrality by 2050 has announced its acquisition of British public electric vehicle charging network Ubitricity.
According to Ubitricity's website, the company currently owns and maintains approximately 2700 on-street charge points throughout Britain. Founded in 2008, the company is partially owned by automotive manufacturer Honda.
Shell said of the agreement: "This acquisition marks expansion into the fast-growing on-street EV charging market and will provide critical competencies, helping us to scale our overall electric vehicle charging offer."
Unveiling its new plans for reaching its goal of being carbon neutral by 2050, the global energy company recently announced its plans to roll out 500,000 electric charging stations in just four years.
Royal Dutch Shell CEO Ben van Beurden said: “We must give our customers the products and services they want and need – products that have the lowest environmental impact. At the same time, we will use our established strengths to build on our competitive portfolio as we make the transition to be a net-zero emissions business in step with society.“
After being at its lowest in 2020, Q4 2019 saw Shell’s media budget rocket to £9m, the highest the oil giant has ever spent in the UK. With its recent acquisitions and ambition to provide solutions to grow in markets where demand for cleaner products and services is at its strongest, the company’s media budget is likely to go back to pre-pandemic levels.
Nestle and Simply Cook
After Nestle bought a majority stake in recipe box company Mindful Chef last November, it continued to build on its direct-to-consumer strategy by snapping up UK recipe kit company SimplyCook.
This is Nestle’s fourth acquisition in the D2C space following its acquisitions of Mindful Chef, Tails.com and US-based company Freshly.
The food and beverage multinational said the agreement brings together its extensive expertise in nutrition with industry leasing research thanks to SimplyCooks’s entrepreneurial vision to make cooking more accessible.
Leveraging M&As to increase Nestle exposure to attractive market segments is part of the company’s portfolio transformation strategy. It targets its D2C investments at more developed markets with deals focused on the UK and US. Who could be the next D2C brand that gets acquired by the food group? Could it be Feastbox or even Allplants? Both are brands to keep an eye on.
SimplyCook’s, Mindful Chef’s and Tails.Com’s media budgets all dipped in Q3 2020 compared to the previous quarter. These will surely increase as restaurants reopen and the battle between staying in and cooking or dining out begins.
LVMH and Birkenstock
LVMH announced last week that it was acquiring a majority stake in the German sandal brand Birkenstock in a deal thought to be worth a cool £3.5 bn. Birkenstock said in a statement that the acquisition will help the footwear group expand its e-commerce and direct-to-consumer business as well as pursue growth in China and India.
Birkenstock also said that 2020 proved a “record year” despite the coronavirus pandemic during which “many companies in the sector suffered”. Financial results for 2020 have not yet been published, but a spokesman for the group said revenues in the year to September 2020 were in line with the €721.5m Birkenstock made the previous year despite factory closures during lockdowns.
The Head of LVMH Bernard Arnault said that his investment would help the sandal maker “fully realise its significant growth potential”, adding: “Birkenstock was founded nearly 250 years ago and has grown to become one of the few iconic brands in the footwear industry. We truly appreciate brands with this long heritage.”
With this desire for growth online and offline, it is most likely that Birkenstock will start looking for an agency and take a multi-channel approach to its advertising. Its Head of Marketing Susanne Hein has just left to join Red Bull so keep your eyes peeled as we announce who has replaced her.
The ‘buy now pay later’ company has said that it is on the hunt to make acquisitions as it raised a fresh $1bn investment, valuing the Swedish fintech company at $31bn, almost six times more than it was worth 18 months ago.
Klarna’s ambitions are increasing with its CEO Sebastian Siemiatkowski saying that the fintech company had the chance to transform retail banking in the same way that Tesla had changed car making. Its $31bn valuation ranks Klarna ahead of all listed Swedish banks and only just behind Nordea in the Nordic region.
Klarna processed payments of $53bn for retailers last year, generating operating incomes of $1.1bn, but a net loss of $160m as a result of its expansion in the US.
The ‘buy now pay later’ offering has spiked, and more and more retailers are partnering with fintech companies like Klarna as consumers want to avoid paying interest on their credit card purchases and the ability to spread costs over a period that suits them.
Klarna’s app also benefits retailers since it makes them more accessible to customers, facilitating their customer acquisition efforts.
Even though Klarna is investing in building apps that include payments, other financial services and shopping features it has aims for ubiquity by allowing the buy now, pay later features to be used at any retailer, not just ones that have been integrated, by issuing virtual payment cards directly into the smartphone.
Klarna said that the funds raised will be used to turbocharge growth and that the quickest way to do this would be through an acquisition. It doesn’t look like the start-up will acquire a competitor as its CEO has said that he was “less keen” in acquiring competitors because of the complexities of integrating new services but was interested in technology companies that could help people save time or money. It could be looking at one of the brands in ALF’s New Entrants Report or D2C Report.
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