Pass Well Beyond Go and Collect $2 Billion: Communicating a Corporate Buyout

Beuerman Miller Fitzgerald Corporate Buyout BMF

Monopoly to some conjures up memories of spirited family tomfoolery, colorful language, tiny pieces and fake bank notes being hurled at each other. Or was that just my family? Monopoly to others means something a little less jovial but perhaps just as likely to involve objects being projected! The end of September saw a seismic flurry of buyout activity and while none of the most recent players reign supreme over their segment, as communications professionals, we have an insatiable curiosity about what these multi-billion-dollar moves will mean for the parent company, their acquisition and the consumer. Did all involved effectively communicate and engage with their audience about the changes, all the while protecting their brand, stock prices and corporate reputations?

The first tectonic plate shift comes courtesy of the music industry. The heavy hitters in the streaming space: Apple Music, Spotify, and Pandora have been keeping each other ambitious for the top dog position of the global market that was reportedly worth US $17.3 billion in 2017. At the end of September this year, satellite radio kingpin SiriusXM announced it will buy Pandora Media Inc for $3.5 billion in an all-stock deal and, according to a Reuters article, give the combined entities a market value of around $34 billion, eclipsing Spotify’s $31.2 billion. With Sirius’ current success having been with commercial-free, car radio subscriptions, opinion is this acquisition will go a long way in keeping Sirius competitive in the ever-growing segment and in step with the behemoths Apple Music and Spotify. SiriusXM posted a statement on Twitter and Facebook but it’s easy to see how the simple, single post on both could have gotten lost in the glittery blur of celebrity music news. SiriusXM missed a great opportunity by not engaging with any of the 500+ responses on Facebook, a lot which were concerns, questions and negative commentary and nothing was posted on either platform for Pandora. Having worked with clients on reputational issues such as mergers and corporate downsizings, BMF considers communicating with stakeholders in a timely and effective manner critical. Whether you know exactly what the future is going to look like or not, even the more challenging advisories, should be looked at as a welcome chance to interact with your audience. With an announcement this significant, it’s important to be proactive and the narrator of your story before speculation runs rampant.

The next earth-shifting movement is brought to you by the purveyors of all things stylish and glamorous. Also, at the end of September, Michael Kors revealed its intention to buy Versace, not only one of the most formidable high-end fashion brands, but also one of the most recognized names in the world. The $2.1 billion transaction is described by Kors as a “milestone in its expansion plans” and is understood to be a move to secure a bigger share of the luxury end of the fashion market. This continues an evidently growing trend of fashion brands joining forces, and comes just over a year after Michael Kors acquired Jimmy Choo and Tapestry, the artist formerly known as Coach, bought Kate Spade and Stuart Weitzman the year before. In an effort to encompass all brand names under the one umbrella, Michael Kors will follow Coach’s suit and change its name to Capri Holdings once the Versace deal is set in stone, which is expected to be at the end of the year. Versace anchor and creative director Donatella Versace and Chief Executive, Jonathan Akeroyd are both maintaining their positions and have communicated forward-looking and harmonious messages. This is a great indicator of maintaining brand stability and continuity as well as growth and advancement. Donatella posted an empowering, inclusive and affirmative statement on Versace’s Facebook page, that not only put a public face on the merger but confirmed her own longevity as the brand’s top ambassador. But much like the SiriusXM acquisition, we suspect Michael Kors and Versace overlooked a key opportunity by not interacting on Facebook with the lukewarm reaction from followers of the Versace brand. Being excited and hopeful does wonders but if you don’t put the subject in a context your stakeholders can relate and identify with then you risk losing them altogether.

Takeovers of this magnitude are certain to continue, with honorable mention also going to Atlanta-based Inspire Brands, parent company of Arby’s, who announced they would acquire Sonic in a $2.3 billion deal, also at the end of September this year. Mergers are almost always interesting to observe as a strategic tactic organization employ to fulfill their obligations to shareholders and maintain relevance at a time when consumers are being bombarded with more noise than ever. BMF feels strongly that what will set any brand or organization apart from the other players is their transparency and ability to think externally. Use all the public facing resources you must communicate with your followers about what the changes mean, not just for your organization’s structure and culture, but for the average Joe’s loyalty and ultimately hip pocket!