Would an STMicroelectronics – Infineon merger work? Received wisdom in the semiconductor industry ihas it that mergers don’t work. And it’s received wisdom that the exception which proves that rule, is the merger between SGS and Thomson which formed ST.
It’s also received wisdom that a large part of why that merger worked is because of the character of the CEO of SGS, who became the CEO of ST, Pasquale Pistorio.
If any man was designed to make an Italian -French merger a success it was Pistorio. For a start, he speaks many European languages. One of his party tricks at international conferences was to take a question in one language, translate it into another language for the benefit of the audience, then give the answer in the languages of both the questioner and the audience.
And another great quality Pistorio has, which helped make the SGS-Thomson merger a success, was a liking for people. People like him and trust him, and he likes them. That did an awful lot to soothe the inevitable ruffled feathers of a Franco-Italian rumble.
Culture is said to be the stumbling block for mergers in the chip industry and ST, with its marketing-led culture, is rather different from Infineon's engineering-based culture.
In product terms, there is no doubt that there are many similar areas between ST and Infineon, Both companies are strong in analogue, wireless and automotive.
But sharing stregnths does not make the companies a complementary fir in a merger. Shared stregths, after a merger, can lead to lay-offs and bitterness as one product line gets ditched in favour of one from the other company..
A truly complementary merger is one where one company’s weaknesses are matched by the other company’s strengths and vice versa.
So is the merger a go-er? Or just a rumour floated by some city guys wanting to see some M&A action?
Perhaps the question to ask is: Does Bozotti speak German?
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Comments (2)
The most disastrous mergers I saw were where the acquiring company bought the other for the wrong reasons. Such as GE buying the old Intersil for their MOS-Power devices, when the strength of the company was the IC design operation, which within a few months mostly left to found Maxim. And the British paint company that bought a small surface-mount-board assembly house, because they had an interest in a method of plating PCB-like items onto a plastic case. The samples I later saw looked just awful. For me, they both led to my two best stock-option gains, but as acquisitions, they were disasters.
Probably not a factor in ST-Infineon, however.
Posted by Peter B | August 24, 2007 12:05 AM
Posted on August 24, 2007 00:05
I agree. The United Technologies Corp takeover of Mostek lost UTC a billion and the the Schlumberger takeover of Fairchild cost Schluimberger about the same.
And the GE-RCA-Harris-Intersil combo didn't really go anywhere.
AMD-Latice was a bit of a disaster.
Mind you Philips-Signetics worked OK. But i think that's the exception.
Posted by David Manners | August 29, 2007 2:16 PM
Posted on August 29, 2007 14:16