Asian Mergers and Acquisitions: Riding the Wave

CHAPTER EIGHT

Culture Matters

Many executives understand that culture matters in mergers and acquisitions (M&A) but fail to address it sufficiently. Culture will be an important consideration given the diversity of Asia, and the inevitable increase in “West-East” deals. Cultural differences are not just at the national level; corporate cultures as well as local cultures will need to be dealt with. We have an eight-pronged approach to tackling culture: conducting a culture audit, putting a label to differences, maintaining communication, leveraging the 100-day plan, understanding the web of relationships, looking for hidden costs, addressing the talent challenge, and managing local expectations.

The tantalizing prospect of forming the world’s fifth-largest food and beverage company brought Japan’s Kirin Holdings and its smaller rival, Suntory Holdings, to the table in 2009. The merger talks fell apart when the discussion turned to integration. In early 2010, both parties walked away from the deal, citing a clash in corporate culture.

Publicly listed Kirin, a well-structured organization run by a professional management team, didn’t see eye to eye with the privately held Suntory, which is still controlled by the family of its original founder. Kirin wanted the merged entity to be run by an independent, professional executive team, and accused Suntory of wanting to structure the shareholding of the merged entity so the family members could retain control. After going round in circles, ...