Mergers and Acquisitions

Magdalena Kulik

by the 323 team Michał Bachryj Aleksander Gajdus

Agenda

1. Background of both companies 2. The merger3. The outcome 4. Final analysis (what went wrong?)

QUESTION

What do YOU know about SIEMENS?

1.Background SIEMENS

Siemens is one of the world’s largest and most respected companies in the field of electrical engineering and electronics.

1.Background SIEMENS

Its more than 470,000 employees in 150 countries, develop and manufacture products, design and create systems and plants, and provide customized services.

1.Background SIEMENS

In fiscal 2006, Siemens generated sales of more than €87 billion and net income of over €3 billion in its six business areas:

1.Background SIEMENS

Information and Communications, Automation and Control, Power, Transportation, Medical, and Lighting.

QUESTION

What do YOU know about BenQ?

1.Background BenQ

BenQ, a worldwide company designing, marketing and manufacturing of IT lifestyle devices that comprise multimedia displays, storage devices, imaging and communication products.

1.Background BenQ

BenQ’s revenue: Taiwan-based parent company and

BenQ's 100 percent-owned subsidiaries whose major lines of business are the manufacture and sale of BenQ products.

Profits from subsidiaries not 100 percent owned are booked under non-operating items.

1.Background BenQ

The company changed its name in December 2001 from Acer Communications & Multimedia Inc. to BenQ Corporation.

They produced phones for such companies as Nokia and Motorola.

QUESTION

When was the first time You have heard about BenQ Siemens phones?

1.Background BenQ

Not many know tht BenQ stands for:

1.Background BenQ

Not many know tht BenQ stands for:

"Bringing Enjoyment and Quality to Life"

2.The merger

“We have found solid perspectives for our loss-bringing cell-phone department. BenQ & Siemens complement each other perfectly”

Siemens CEO Klaus Kleinfeld

2.The merger

In 2005, after months of difficult negotiations, two companies have agreed to join their forces.

A horizontal merger was set up.

They had different reasons…

2.The merger

Benq – it was an opportunity to become widespread on to the european market.

Siemens – it was a way to deal with a loss producing Siemens Mobile department, by selling it to the ambitious Taiwan company.

2.The merger

Selling Siemens Mobile was a part of Klaus Kleinfelds restructurisation programme. The mobile phone section of the company hasn’t been producing income for some time.

2.The merger

Siemens wanted to get rid of its mobile production so bad, that they`ve paid 300mln euro to Benq for taking it over.

2.The merger

Despite the bad situation in SiemensMobile, Benq was optimistic. It promissed first profits in june 2006.

QUESTION

Which football club did BenQ Siemens sponsor?

2.The merger

A symbol of their ambitions and optimism was depicted in sponsoring a great football club – Real Madrid.

2.The merger

Unfotunatly, reality kicked in. Inspite of introducing new phone models under a new brand – Benq Siemens – sales were miserable.

QUESTION

How many of You have ever seen a BenQ Siemens mobile phone?

Such products as:

Business phones

„The Flower Phone”

„The Butterfly Phone”

„The Rich B***h Phone”

„The White Power Phone”

And the absolute favourite….

„The Hello Kitty Phone”

3. The outcome

Results soon apeared: a decline in market share from 6 to 3 percent, putting it behind its main competitiors – Nokia, Samsung, Motorola, Sony Ericsson and LG

3.The outcome

That could mean only one thing: failure

3.The outcome

In September 2006, BenQ decided to declare insolvency of its new company, leaving european employees and subsidiaries on their own.

3.The outcome

• 3000 Germans and 400 Poles loose their job in Benq Mobile

3.The outcome

• 2 factories in Germany closed

• software development center closed in Wroclaw

3.The outcome

• a 35 mln euro found created by Siemens to calm down angry employees

4.Final analysis

What went wrong?What do YOU think?

(Was it the „Hello Kitty Phone”?)

4.Final analysis

Currently the key to success and domination on the market is not simple.

4.Final analysis

It consists of things like megapixels, bits, optical zooms, and breathtaking designs.

4.Final analysis

For example Samsung has just introduced a phone with a 10 megapixel camera…

4.Final analysis

The main problem was the phones were too simple…

4.Final analysis

Not enough megapixelsNot enough bytes

Not enough functions

+questionable marketing

4.Final analysis

All phone manufacturers need a breakthrough model.

4.Final analysis

Motorolla has its “RAZR” – pioneer design helped the company reach

third place in market share.

4.Final analysis

Nokias` 3310 model was sold in a massive number of 130mln.

4.Final analysis

Not to mention designer 7 series, business E series and powerful

multimedia N series

4.Final analysis

Benq simply missed out in that field, having nothing special to offer…

THANK YOU