A Tale of Two Mergers: What Happens When Companies Collide

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Posted At: April 9, 2008 12:33 PM
by Amelie Smith and Sarah Yates

For newlyweds, the merging of assets is an exciting start to a new beginning. It is the beginning of a long life together, during which a family is created and memories are plentiful. In the corporate world, the merging of assets has a different connotation. It is the loss of one company’s dream in exchange for another company’s ambition. The worst part is that mergers in the corporate world affect not only those companies, but also the public who has a customer relationship with those companies. So what effect does a merger have on its customers? Let’s look at a few examples to find out:

The 411 on cell phone companies

A few years ago, Cingular Wireless was one of the most popular cell phone companies. With comical advertising campaigns that mocked the texting phenomenon and provided scenarios showing the importance of not dropping a call, Cingular was able to attract the highly sought-after youth market.

Now, fast forward to the present day where AT&T Wireless has taken over the former Cingular service. Although the logistics of the merger took place back in 2004, the public has only recently begun seeing the effects through AT&T’s recent marketing campaign.

According to its Web site, AT&T serves 70.1 million customers in America alone. This number includes the people who were previously Cingular clients and stayed with the company after the merger.

So the question remains: What about consumers who formed a relationship with Cingular and were then forced to either switch services or accept the merger?

Some might argue that AT&T has done a good job of keeping its clients happy. By using tactics such as partnering with Apple and restricting purchases of the iPhone to AT&T users, some clients might think that AT&T works hard to give them the best products on the market.

Others might think that this monopolizing tactic is just another way to control those around it.

So how will the story of the Cingular/AT&T merger end? It might be too early to tell. But it appears that the public is happy and continues to do business with AT&T. And in public relations, the customers are what matter.

Source:

(2008, March 10). AT&T—Investor Relations. Retrieved March 10, 2008, from http//:www.att.com.

Photo Credit: Katie Bivens

Belk: The New Kid in Town

Shoppers in the South were taken by surprise in 2006 when Parisian, a popular up-scale department store, announced that it was undergoing a takeover by Belk, a Charlotte-based retailer with a poor reputation for quality. Some areas responded to this news a little harder than others. In Birmingham, Ala., where Parisian is more like a best friend’s home than a place to shop, clientele took their grief to the next level, responding with hostility toward the newcomer Belk. Cries of “It’s just not Parisian,” and “I’ll never shop there,” could be heard from Legion Field to Vulcan Park.

Jeffrey Bayer is the founder and principal of Bayer Properties, the entity that owns the Summit, a shopping center in over-the-mountain Birmingham. According to The Birmingham News, the mission of the Summit is simple: it strives to cater to shoppers with a commitment to quality in fashion. When Belk announced the $285 million deal to purchase Parisian from Birmingham-based Saks Inc., Bayer filed a lawsuit against Belk, claiming that the department store would not attract the type of customer that the Summit was created to serve.

While the lawsuit did not prevent Belk from arriving at the Summit in 2007, it did show the retailer that Birmingham was serious about its commitment to quality from its stores. Belk is working on plans to renovate the Summit location, turning it into one of the corporation’s flagship stores. The plan is to make it on par with the Charlotte headquarters and the new location in Phipps Plaza in Atlanta. However, even with this proposal, the reception to Belk’s arrival has been anything but friendly from Birmingham shoppers.

Belk has a challenge ahead of it. In capitalistic America, takeovers are a part of everyday life, but rarely is the victor in a corporate struggle for survival seen in a positive light. More often than not, a foreign, unfamiliar presence taking the place of a hometown favorite will be shunned, or at the very least, viewed as alien until it can make a significant contribution to the community. If Belk cannot get the shoppers on its side, it must attempt to enter the hearts of its clients through a different route.

So far, Belk seems to be making an effort to be accepted. According to The Earth Times, on May 3, Belk held a charity sale that will benefit schools and charities throughout its 16-state territory. This kind of promotion, in addition to its promise to uphold high standards of quality, is exactly what the company needs to improve its relationship with Birmingham shoppers. But only time will tell if Belk’s efforts are enough to win the allegiance of its new clientele. If not, Belk faces the possibility of being viewed as “a stranger in a strange land” forever.

Sources:

Goodman, Sherri C. (2007). “Summit Belk to Become Flagship.” The Birmingham News. Retrieved February 25, 2008, fromhttp://blog.al.com/spotnews/2007/04/summit_belk_to_become_flagship.html

Griffin, Kelly & Williams, Jessica. (2008). “Belk Charity Sale on May 3 Benefits Local Charities and Schools.” The Earth Times. Retrieved February 25, 2008 fromhttp://www.earthtimes.org/articles/show/correcting-and-replacing-belk-charity-sale-on-may-3-benefits,288352.shtml

What effect do you think a merger has on a company’s publics? How would you handle it?

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