Innovation

When David Acquires Goliath: In A Merger Gamble Made Steeper By The Credit Crunch, A Biotech Powerhouse Emerges

Date Added: May 2010
Format: HTML

David, the buyer, was riding an excellent string of consecutive quarters of growth, coming off an earlier wave of failed acquisitions and contemplating a life-event transaction. Goliath, the target, was a good operational fit with a depressed share price - but was far larger. Deloitte provided strategic, technical and cultural services and guidance to David in support of their efforts to acquire Goliath. Deloitte helped them integrate the multi-billion-dollar company and give birth to a global biotech company that is outperforming analysts' expectations. Combining a company with one of their suppliers would ordinarily constitute a natural move toward vertical integration. However, this life event transcended the normal risks of effective acquisitions. The global footprint and large workforce of the combined entity made this a very large deal while the target's operational complexities and market position presented unique challenges. Investors and industry analysts alike viewed this transaction with skepticism. Deloitte approached this challenge with a wealth of industry knowledge and transactional experience that carried from strategy through to technical and cultural aspects, and was a requisite part of the formula to help the buyer in its efforts to find value, feel confident and ultimately proceed with the deal. Tactically, this required taking cost and revenue analysis to a level far deeper than the company had done previously - not just conducting the value analysis, but also spelling out how to make it happen. The company successfully navigated the most challenging event in its history. The combined entity emerged with almost no disruption, galvanized joint innovation to capitalize on market demand and consistently beat expectations.