09 July 2002 13:57 [Source: ICIS news]
If a company is going to make a merger or acquisition work it has to be open with employees, customers, the financial world and the media. It has to communicate effectively. Unfortunately in chemicals, effective communication is not always the case.
The chemicals value reporting study by Price Waterhouse Coopers published in May highlighted the poor level of communication between chemicals sector executives and the investment community. No wonder, it seems, that chemical company leaders can’t see why their companies are undervalued. Institutional investors and financial analysts want to understand companies better but they simply aren’t getting the vitally important valuation information they need.
Catherine Maxey of Dow Chemicals looks at the communications issue from a different but no less important perspective in the latest issue of the American Chemistry Council’s journal Chemistry Business. Writing specifically about the Dow/Union Carbide merger she offers some valuable insights into how the Dow communications process helped bed in the merger with Union Carbide and how the process has to be on-going to be truly effective. Dow mounted a significant communications exercise prior to and post the Carbide merger announcement. It learned a lot along the way.
Any merger or takeover process passes through necessarily secretive and emotionally charged periods. Both have to be managed effectively. In Dow’s case the merger goal was to successfully integrate what were widely seen as complementary businesses and to produce measurable synergies; in other words, successfully navigate the merger period and then introduce significant workforce and asset consolidations. Everyone at the time was watching one of the biggest mergers in chemical industry history but Dow’s communications team had clearly to define audiences and just what the company wanted to and could tell them.
At the time of the merger announcement the communications goal was to successfully generate positive media coverage but it soon became a job of reassuring stakeholders that everything was proceeding as planned prior to the shareholder vote on the deal. Communications during the lengthy regulatory approval process were far from easy.
The companies agreed early on a set of round rules for this period which essentially meant that each company would handle its own communications programme but share material and tactics consistent with guidelines provided by corporate lawyers. Clearly, before the close of the deal each company could only speak about itself, but Dow had to prepare fiercely loyal Carbiders with a clear understanding of the similarities and differences in corporate cultures to ease the eventual merger process.
The Union Carbide communications department was provided with question and answer news articles which they subsequently published. One of the most sensitive jobs was to explain the eventual demise of the Union Carbide hexagon logo. On the Dow side, senior executives were prepared to deal with the problems and pitfalls they would face when they had to implement the merger and explain just what merger synergies meant in practical terms for employees and Union Carbide locations.
Post closure the communications work really began and broadened out to encompass customer communications, advertising and issues related to corporate identity. As Maxey says, key components in any post merger communications programme are: ensuring that stakeholders feel valued and are ‘in the know’; continuing to generate investor confidence in the integration; and emphasising what is changing for employees to allow a smooth post merger transition.
Maxey says the different phases of the Dow/Carbide merger process were managed successfully but acknowledges that there are always lessons to be learned. Her list of areas for improvement includes: more two-way communication (such as focus groups and forums); transparency and openness within the legal restrictions; and what she calls executive ‘face time’ with employees. And she makes the point that the communications programmes continue to this day. Indeed they never end. One of the most dangerous assumptions in any communications programme, she notes, is that the exercise is complete.
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