Case study -1

Expanding Through a Major Acquisition

Puts Ingredient Solutions Firm on Path to
Global Growth
It was his first day on the job, and the CEO of a major ingredient solutions
company was handed a golden opportunitya global conglomerate was
seeking a buyer for its specialty ingredients arm. The CEO, who had been
brought on with a mandate to grow the business, jumped at the prospect. The
$1 billion-plus deal would allow the company not only to diversify its product
portfolio, but also to expand its global presence in complementary geographic
regions. And the acquisition offered access to an innovative research and
development platform with the potential to deliver exciting new products and
customer solutions. But an acquisition on paper is only as good as its
execution. The CEO and his management team needed a clear integration plan
that they could execute quickly from Day 1.

Situation

The management team faced a steep challenge in completing a successful

global integration across its business units, functions, and geographic regions.
The financial community was looking for fast returns in meeting cost and
revenue targets, and assimilating the target company's more than 10,000
employees would be critical to the merger's success. The CEO called on
A.T. Kearney for help with all aspects of the integration, from bringing together
go-to-market strategies, operations, and procurement to combining global
functions and capturing synergies.

Approach

Prior to the close, we worked with the merger and acquisition team to
establish the structure and processes for a seamless transition on Day 1. We
also helped create a new leadership structure and mapped out all sources of
value creation. This pre-close planning mitigated the risk of a power vacuum,
helped maintain momentum throughout the integration, and ensured
appropriate leadership continuity.

More than 15 functional integration teams with 150 global team members
worked around the clock to prepare for Day 1 and the next 100 days. The
large number of people involved worked to our advantage, since it meant
there were enough people to actually complete all the required tasks.
Establishing synergy targets from the bottom up rather than the top down also
brought everyone aboard early, making employees the owners of the merger's
success.

After the close, there was more work to do. Our focus turned to realizing cost
and revenue targets and integrating new employees. Exiting 95 percent of
transition service agreements within 180 days proved a critical first step,
providing some much-needed breathing room. During the first few days after
the merger, we conducted an all-inclusive cultural survey, prioritized the more
significant gaps between the two cultures, and provided recommendations for
bridging them.

Impact and Advantage

Following the close of the deal, more than 10,000 employees seamlessly
transitioned to the new company. Business continuity was flawless
customers and suppliers hardly noticed the shift, and employees knew exactly
what to expect. Six months later, the company was on track to surpass the
cost-synergy targets promised to the financial community and was on
schedule to meet its revenue targets.

Case study 2

Capturing More Synergies in Less Time Spells

Success for Global Merger in the Coatings
Industry
When a Dutch global coatings company decided to pursue a major U.K.
competitor, the business world watched closely. The $17 billion acquisition
brought together two giants in the coatings sector to create a global industry
leader. The new company would comprise 72,000 employees, leading brands,
innovative technologies, and complementary geographic footprints. It would
dominate in 46 countries and enjoy a market presence in many others.
Nevertheless there was some skepticism in the financial community about
whether the merger would be successful. The management team needed to act
swiftly to deliver results.

Situation

Despite their combined global presence, the two companies had limited
geographic overlap outside of Europe. As a result, delivering the promised
synergy targets of $390 million would be challenging, even more so given the
timing of the acquisition: There were already warning signs of an impending
global recession. For support in bringing about a speedy, best-in-class merger,
senior executives called in A.T. Kearney.

Approach

We worked side by side with integration leaders to execute the global merger.
Our work spanned the entire integration, from planning and execution to value
capture and design of the leadership structure for each business unit (BU) and
function. We decided to establish a light but robust integration management
office (IMO) to stay small and flexible enough to coordinate our efforts quickly,
while retaining the global depth to operate in all time zones.

Combining two different corporate cultures is almost always a struggle. We

mapped both cultures to identify potential road blocks to the integration so that
the team could address them immediately. The mapping exercise also allowed
us to highlight and promote similarities between the two cultures, which was
useful for building and maintaining momentum throughout the integration.
Constant communication was pivotal to keeping all internal and external
stakeholders informed. Therefore, even when important decisions were not
ready for release, we kept communications flowing by talking about progress,
people, and next steps.

Determining synergy targets can be tricky as it often requires overcoming

opposition at the local level. Joint value-capture teams helped us find the
balance. We also involved the CFO early in the synergy-review process to
validate the numbers before the IMO leaders presented them to the market or
baked them into any financial plans.

We worked with the integration team to assign all BU and functional

leadership positions and their teams within 90 days following the merger,
moving the best people from both organizations into key positions. The
merger was an opportunity for the combined company to move beyond what
either organization could achieve individually. Together with the integration
team, we created an "aspirational" organizational structure and governance
model that would ensure lasting advantage.

Impact and Advantage

"The process was seamless," said a company executive in describing the Day
1 integration. Project teams executed successfully and were able to deliver
and track synergies according to plan. After Day 1, IMO leaders stretched
select targets to deliver even more synergies, and savings ultimately
surpassed the $390 million target. Perhaps most important, the integration
was complete within the target 12-month period without a negative impact on
revenues or customer relationships.
Case study -3

Introduction
In February 2014 Facebook announced the firms biggest acquisition
ever. Facebook CEO Mark Zuckerberg managed to agree on the deal
with WhatsApp founders Jan Koum (38) and Brian Acton (42) for
astonishing $22 billion.

Reuters stated that acquisition was the sixth biggest in technologies

and biggest ever in history of acquisitions of software companies.

I will look into some details of the acquisition in this paper. Also, I
will try to bring up some information on why this merger happened
and why it was important for Mark Zuckerberg to complete the deal.

The story of WhatsApp

When Jan Koum the Ukrainian-born immigrant who dropped out of
college and ex-Yahoo engineer Brian Acton founded WhatsApp
company they probably didnt even dream about what happened in
three years later.

From the moment of opening the newborn firm, both founders wanted
a different kind of company.

Instead of developing so popular online games, rapidly growing

business with promising returns, they focused on building a clean,
superfast communication service. And numbers says it all for these
guys.

Four numbers tell the story of the company, which decided not to
have a sign on the door of its headquarters in Mountain View.
450 In the moment of announcing the acquisition, WhatsApp had
more than 450 million of active users. Application reached that
number faster than any other company in history. When comparing
with Facebook, they went over 100 million users in something over 2
years. Facebook needed one more year.

Every day, more than a million installed the app that time.
Engagement rates were also incredible, as more than 72% remained
active daily. Industry standard was around 10 to 20 percent.

32 It may sound unbelievable, but only 32 people were working in

the company in February. Later in October, when merger was
realized, company was employing 56 people.
When calculating employee to customer ratio, one WhatsApp
developer was serving more than 14 million active users. Once again,
number unheard in the business before.
While the team remained small, service was still highly reliable with
uptime over 99.9%. Number any user in need of instant
communication will definitely like.

1 As was mentioned above, company decided to have different style

from beginning. Purity was on the first place. There were neither
marketing tricks nor strong promotions campaigns to support the
application.
Jan and Brian initially charged a dollar for their product. Service costs
$1 per year! Without any other charges for SMS, this could save users
nice bunch of money. And listen what. First year of was for free.

0 Zero. This is total amount of money company has invested in

marketing. The company did not employ any employee to conduct
marketing or PR. Instead, WhatsApp was built as lovemark, a
brand connected with strong emotion. And there is no better
marketing than a word of mouth. All customers were quickly
encouraging their friends to try the service.
Certainly, there are also other reasons why company becomes so
successful. Lets now have a look from the Facebook point of view.
Why the heck would somebody pay billions for an application
developed by a dozen of people?

Key factors enabling merger

Back in April 2012, Facebook bought Instagram, iPhone application
of the year in 2011, for 1 billion dollars. And some said it was
overpriced.
What must these people thought when Mark Zuckerberg announced
new buy operation worth $19 billion at first word and nearly $22
billion when signing? And why was he willing to do so?

User base
WhatsApp was making money by charging 1 dollar for their service
worldwide. With millions users around the globe company was able to
make annual revenue about $20 million. That number would probably
not justify the amount of the acquisition deal. But Facebook was
looking for other opportunities.

WhatsApp was already serving more than 450 million monthly active
users, and Facebook was of course buying this potential too. To
compare, Twitter had 241 million users at the end of the same year,
operating 3 years longer than WhatsApp.

By the way, WhatsApp had more than 600 million of users in the end
of that year.
The acquisition supports Facebook and WhatsApp's shared
mission to bring more connectivity and utility to the world by
delivering core internet services efficiently and
affordably.WhatsApp fits this vision perfectly; it has incredibly
strong engagement and growth. It's the only app we've ever seen
that has grown more quickly than Facebook itself, the social network
said.

Mark envisioned that application may reach to 3 billion users in

future, meaning serving almost half of planet population. He planned
strategy to grow and connect people first. Monetization itself was
secondary at the time of merger.
Engagement
As was already mentioned, engagement rate of WhatsApps users was
unseen before. It was mainly driven by its availability, reliability and
mostly by its simplicity.

More importantly, application became attractive also to teens. Target

group that is looking for new platforms and ways of communication
and that is not so attracted by the biggest social network as others.

Facebook was all around a while, but acquiring WhatsApp would

enable company to practically reach users on mobile devices using
fresh instant messaging service.

Volumes
Plenty of users mean huge volume of data provided. WhatsApp
messaging volume was comparable with entire global SMS
telecommunication volume - 19 billion of sent and 34 billion of
received messages.

Additionally, more than 600 million photos were uploaded, 200

million of voice messages and 100 million of video messages were
sent. DAILY. And all the numbers were doubling year over year.

Looking over numbers, one realizes that WhatsApp was about to

change global communication. And the change was already
happening.

Imagine loses other companies suffered just by erasing 33 billion in

SMS revenues. You just had to pay one dollar and thats it. No
advertisements, no stickers, no premium programs. Simple and clean
service only.

Security
Security is something more and more users are looking for nowadays.
Mainly when comparing with other services like Skype known for
their security vulnerabilities and possible monitoring.

Within WhatsApp, every message was deleted from servers upon

processing. How simple again.

Merger details
Price
Firstly, Facebook offered unimaginable amount of $19 billion to buy
WhatsApp. Koum holding bigger share in WhatsApp was to get about
$6.8 billion and Acton $3.5 billion after taxes. Jan Koum was also
granted a seat on the Facebook board with salary of 1 dollar (the same
as Mark Z).

Facebook gave 177.8 million of its Class A common stock shares and
$4.59 billion in cash to WhatsApps shareholders.

Fortunately for WhatsApp owners, Facebooks share value had risen

from February 2014 to October 2014 when deal was realized by
another $2.8 billion. In the end, acquisition was worth $21.8 billion.

The acquisition of that size had to go through regulatory approvals.

Companies were worried and it was said that WhatsApp may hurt
players such as Deutsche Telekom, Orange and Telecom Italia with its
plan to offer free voice calls to customers. However, The European
Commission said the deal would not hurt competition.

Independence
Koum and Acton were pretty clear about how the deal should work.
They already had a good arrangement with their venture capital
backer. All they asked for was independence.

They were known not only because of not having any door sign, but
they also rarely went to Silicon Valley networking events and they
didnt negotiate about WhatsApp even there were constant offers.

Instead of paperwork and bids on company, Zuckerberg and Koum

became friends, having a dinner at least once per month. Thats the
way it stayed also after the deal, when Koum entered Facebook board.

Company settings
Zuckerberg understood the principles on which WhatsApp, and
Instagram similarly works. He bought the companies, but let them
operate as independent entities.

Koum was select to serve as WhatsApp Chief Executive and become

a Facebook director. His salary was set to $1, equal to the Marks one.

Company was set to continue its operations from their base in

Mountain View.
WhatsApp is going to operate independently, reiterated Zuckerberg
many times while merger was happening. We want to do this the same we
did Instagram.

And finally, Facebook statement on the WhatsApp operations settings: WhatsApps

brand will be maintained; its headquarters will remain in Mountain
View, CA; Jan Koum will join Facebooks Board of Directors; and
WhatsApps core messaging product and Facebooks existing
Messenger app will continue to operate as standalone
applications.

Conclusion
In 2011, Microsoft bought Skype for $8.56 billion to strengthen their
position in free instant messaging, and voice- and video-chat markets.
Later in 2012, Facebook bought Instagram, iPhone application of the
year in 2011 for 1 billion dollars. But both these mergers were far
away surpassed by Facebook acquisition of WhatsApp last year. One
of the biggest acquisitions in history.

I tried to uncover some details about this merger. I described how

WhatsApp company functioned and what was special about it. I used
four important numbers to illustrate the story of the firm.
Next, I pinpointed some key factors to make clear why the merger
happened and what was Facebook actually buying.

In the end, I stated some merger details like how the contract was pay
out or how the WhatsApps operations was set to continue once the
company is taken by the biggest social media network. I hope you
enjoyed the story.

Case study 4

Mi
lau bra5%MaInd tryitheMaMithiscogroattr so t moMiis cfornecur My
rosoft Nok
ched Lumid featuresand with tket. Sonyan smartg to save isituationket
Shareromax stowas nece pete withn compactive offer hey make
sMicrosoftile segmerosoft OSaptured byapple and bRegardingarea for
r ent positiostudy willMarket
a Deal: A
a range witself fromis marketstands onhone mar ts marketas
differeand theyd in the msary forompetitor ies are uns. Nokia atrategic
alliindows ist windowsn india isGoogleslackberry.SWOT anasearch. Das
and lead e based ohare of V
WOT Anal
ich helpedlow end tohare nokiafifth slotet is chanhare in Ind t for
Nokiccupy secrket withokia to d who areerstandingd Microsoance.a
market lis facing r n second prand Andr lysis thereta that is r

ership. I a these data.rious Bran

ysis
nokia to gahigh endcapture foith 4.6 %ing veryia. Accordia. Nokiaond
slot i.7% of ma somethinoming wit Indian yot just wantader in coegular
challace afterid 5.4% is no data ilated is ab using sec.s in India in
some market. North positiomarket shuickly anng to Voicas in
Bett Indian Mrket share
5
for gaini everythinth and cato gain ma puter oper lenges fro pple
iOSrelated toavailableout marketndary reso Smart Phorket share.ias
Marke in the Ind re
4
. Thiscompanie and Datar positionarket, in fi(Voice &ng someg in
theirturing theket share iating syste its biggend BlackbWindowsecause
thishares of crces of dane Market Nokias Lt share in

ian Smartpata revelss like Nok s report inwith 27.2scal yearata

reportarket shaortfolio. H by provi Indian M market bst
competiterry. 90%S and oth is respectiompanies,a for my
p graph.1)15mia2 isonethatia is012of012. Soe toomedingrkett
inors.hareer isvelyheir per.
16
SW
SWcoof tWeOpwhthrethe
Str
Nonok straThiis otheenjAftshihasmoSof Bragrowisma por Gecon
OT Analy
OT analys pany must

he compankness of tortunity f came togats whichcompany.

ngths
ia Micr ias handsetegic allians deal willne of the be will be tying secor
this dealment. Nok only 4%ey fromware andnd which i p. For Noe Nokia
ising handsfolio.Afterspatial ser tinue workMarket
is of Noki
s is referscare aboutin this pe companr companyether for d an affect
tsoft deal it businessce to creatrovide str iggest braansfer of gd
positionMicrosoftia sells moarket shaach windoardware
4
.s targetedia it is lif always ome monedeal bothices. Nokion HAREhare
of A
-Microsof
to four tethese four per this isin this cas in paper teal, T refee
compan win-winand there p

e synergyng platfor ds in indiareat hardwn smart phand Nokiare than

80re. By buws phoneMicrosofttoward lo saving de front poi for that
companiesa HAREor its bett droid, Win
t deal
ms whicherms. Theconsider ae this stand is is relats to Threa in this
caituation foatents foretween bo to Micron mobile ire team toone OS
ind will be ab of wind ing nokiasold but ind Nokia ier level il becauset
to its company will able toap app isrment
5
.ows OS ais used ine terms ref the streng for weaknd to oppot from
itsse threat k both com0 years inth compansoft for itsdustries
wMicrosoftustry afterle to makews phoneMicrosoftalso be as
workingcome grohis will giompetitors.hich is hig provide hi

now related others.competitor rs to S stath of the d ess of thetunity

forcompetitoown as theanies. Micash $7.2bes. MicrosOS as allith
27.2%after the dehe marketstronger sut operatinot only ble to beton
its full p to highe them ca Nokiash end smah value seo Microso
Adit
s analysisds for Streal, W refeeal, O refeoth comps and
pote competitorosoft willillion. Thisoft is acqunow that nf market sal.
Microsleader And pply chaig system iill makeer integratrange or Lr
level inch $7.2. Quumia Brart phone ivices inclut but nokia
Jha
eachngths tors toniesntials of buyis aringokiahareft isoid.fortselfore

e itsmiaomealityd isthedingwill
 Microsoft Nokia Deal: A SWOT Analysis
17
Weakness
Deal has its own weaknesses. Both companies Microsoft and Nokia is facing
shrinkin their market. Microsoft is market leader in computer OS but in
Smartphone sectionit has only 4% of market share and Nokia that was Market
Leader in indian Markethas lost its Share. Deal is too late when market is
almost captured by GooglesAndroid OS. Today Android has 90% of Market
Share in Smart Phone Section. Manycompanies adopt Android OS as the
requirement of time or for the better services.Companies like Samsung came
with wide range with smart phones and they targetedIndian youth market.
Nokia-Microsoft is lags behind to market leaders and they arenot attracting
developers to make apps that are one of the most important factor
in purchasing Smartphone. In Computer world Microsoft has its Monopoly but
inSmartphone section Apps developers are more interested to develop Apps for
Androidand iOS. This situation is like a Chicken/egg problem Microsoft needs
market shareto attract apps developers but they need developers to build market
share.
6
Besidethe lack of developer support, Microsoft suffers from what Neil
maswton of strategyanalyst call the companys own Glacier-Like pace of
development. In high endsmart phones Microsoft has not been able to deliver
software that works with fastestmobile chips unlike Andriod. If we talk about
low end service it has not been able toreduce in order to compete, some android
devices wholesale for just $35, While thecheapest Smartphone device is $ 110
in U.S. market in indian market it cost $147.
7
In countries like U.S. people dont like to share things through Bluetooth but
incountries like India people commonly use Bluetooth as their way of sharing
files. Inmany of Windows phone that feature was not available even Lumia 520
was alsosuffering from this. This was the problem for Nokia Lumia brand. After
this dealMicrosoft will also get a troubled area of Nokia Ovi store in their
brand. These are theweakness of the deal which both companies will try to
remove.
Opportunities
This deal has great opportunity if both companies utilise their resources in
optimumway. For Microsoft opportunity is to gain profit as it expects to get
14% of marketshare and want to be second largest Operating system company
for Smart phones.According to Blelfiore Microfsoft will change in its core
system software to allowfor new hardware which will all smart phone devices
of Nokia.Microsoft is workingupon its software to manage incoming photos to
work with Nokia lumia 1020 withits 41 Mega Pixel camera. Software will
allow to images at the one point of the time.This opportunity grasp by both
companies to make future smart phones. India is
still profitable market for nokia and Nokia has big market in India. Nokia need a
Operating system for its devices and Microsoft need Device for its OS. The
future phone segments contributes 60-70% of the overall device market in
India and no onecan ignore it but going forward everything will be Smart
phones and that is growth ishappening (Anshul Gupta principal research
analyst with gartner.)
8
. Nokia hasopportunity in Low Segment smart phone market in India. Nokia
identify theopportunity in low segment and they launched a range of
Smartphone Low to High insegment Nokia 520 to Nokia 1020.In larger context
both companies aims to move 55Million Smartphone to 250 million by 2016.
(Neeraj Roy, The Founder CEO andmanaging Director of digital and mobile
entertainment company Hungama DigitalPrivate Limited)
9
.