Acquisition branding

Part
01
of five
Part
01

US-Based Company Acquisitions-Part 1

In 2017, Canadian company Gildan acquired American Apparel. Actavis (Ireland) acquired Allergan in 2015 whereas British American Tobacco (UK) acquired Reynolds American Inc in 2017.

AMERICAN APPAREL

Overview

Brand Strategy

Brand Strategy Outcome

ALLERGAN

Overview

Brand Strategy

Brand Strategy Outcome

  • The US press, including Fortune and Bio Space, was impressed with the change of the Actavis brand to embrace its acquisition, Allergan.
  • The brand changes of Allergan to reflect the merger were perceived positively by the press. Positive press such as Cision and Pharmafile, noted the new brand reflects its rich heritage.

REYNOLDS AMERICAN INCORPORATED

Overview

  • United Kingdom's British American Tobacco acquired 57.8% of Reynolds America Inc stake it did not already own for $49 billion in 2017.

Brand Strategy

  • British American Tobacco kept the brand name of Reynolds American Inc but refreshed the look and feel of the brand. After the acquisition, Reynolds American logo was changed to Include British American Tobacco logo.
  • Also, the company acquired the brand status as the largest tobacco company in the world.

Brand Strategy Outcome

Part
02
of five
Part
02

US-Based Company Acquisitions-Part 2

Three non-US companies that acquired US-based companies, but kept the branding and look exactly the same as before the acquisition are CPPIB Credit Investments Inc., Royal Bank of Canada, and Restaurant Brands International Inc.

NON-US COMPANIES THAT ACQUIRED US-BASED COMPANIES


1) CANADA PENSION PLAN INVESTMENT BOARD (CPPIB)

  • Canada Pension Plan Investment Board (CPPIB) acquired 100% of GE Antares Capital in 2015 for $12 billion.
  • GE Antares Capital was the leading lender in Chicago then and offered a 'one-stop' service in a $96 billion market in 2015.
  • Antares Capital audience includes "middle market private equity sponsors".

STRATEGY
  • Although owned by CPPIB, Antares Capital was a "standalone, independent business governed by its own board of directors".
  • The brand name was retained because it had already created a strong positive reputation of its own as a leading company in the US and would likely continue to do so even after the acquisition.
  • The team that contributed to the company's long-term success was also retained, which helped the brand to maintain consistency and synergy through the transition stage.
  • This approach was taken by CPPIB to achieve scale using investment platforms, especially one with an exceptional brand position and a strategic owner which in essence would help to both strengthen and diversify their investment portfolio while maintaining CPPIB's business model.
  • The acquisition gave CPPIB scale and access to an already established long-term partnership.

OUTCOME
  • As a result of CPPIB's brand strategy, CPPIB saw a growth in its Principal Credit Investments units from $8 billion in 2015 to $17 billion in 2016.
  • The company has sold a 16% stake of Antares to Northleaf but has not changed its commitment to private equity.
  • Antares has seen year-over-year growth due to the brand strategy which has led to an increase in both assets and market share.

2) ROYAL BANK OF CANADA


STRATEGY
  • RBC decided to keep the brand name of City National, its headquarters location and to allow their leadership team to continue what they have been doing rather than to change it.
  • RBC believed that City National was already a successful company that understood and had a good and close relationship with its customers.
  • This kept high net worth and commercial customers satisfied because they were also served quickly, thanks to City National's entrepreneurial attributes.
  • In fact, the CEO, Russell Goldsmith was retained and given responsibility to handle RBC's wealth management business in the US.
  • This allowed the City National to remain a part of the already reshaped lending landscape with a major boost from RBC's $830 billion assets/balance sheets to its $33.5 billion in assets.
  • Maintaining the brand name for City National Corporation was promising for RBC to gain a stronger presence and increased chances for growth in the US market, it aligned with the strategic goals and created long-term earning potential and maintained a strong capital position.
  • City National used high-touch as well as branch light service models for clients. It was fast growing and had a strong management team.
  • Together, the two companies had the potential to earn $210 million in 5 years with their overlapping clientele.

OUTCOME

3) RESTAURANT BRANDS INTERNATIONAL INC.

  • Restaurant Brands International acquired Popeyes Louisiana Kitchen for $1.8 billion in 2017.
  • This was to be paid by $600 million in cash and J.P. Morgan and Wells Fargo's financing commitment of $1.3 billion.
  • The company aimed to use Popeyes to accelerate growth and open new locations worldwide.

STRATEGY
  • Due to Popeyes' strong performance between 2015 and 2017, Restaurant Brands would benefit from this growth because its other chains such as Burger King and Tim Horton's weren't as successful.
  • Maintaining the brand had its advantage because the company had "a serious stake in the chicken game" which means with more assets, it was likely to keep improving.
  • Restaurant Brand made use of Popeyes' growth in performance coupled with its own "operational model and systems to scale" to increase Popeyes' profitability growth by double digits.
  • They changed offerings in the restaurant to include "a $20 Holiday Feast to address gaps in Popeyes’ family offerings (an area KFC thrives in)" to gain a competitive edge and be seen stronger in the chicken market.
  • They also increased their tech usage to reach more customers.

OUTCOME
  • Stock prices for both Popeyes (19% increase) and Restaurant Brand increased shortly after the announcements of the acquisition.
  • Since the acquisition of Popeyes, Restaurant Brands saw an increase of 5.5% in its net restaurant growth across Popeyes, Burger King, and Tim Horton's.
  • At the end of the 4th quarter of 2017 (post acquisition), Restaurant Brands had a net restaurant growth of 6.1% and the same period for 2018 was 7.6%.
  • Popeyes rolled out its delivery service to more than 1,100 US restaurants, or about 50% of its system — in just a year.

Research Strategy:

In order to find the information necessary, we began with a search for lists of Canadian public companies, ordered by size or deals. Using that information, we searched to see which of the companies on the lists had carried out acquisitions of US-owned companies between the period 2013-2019. After narrowing the list based on that method, we further searched to see which of the companies retained their brands after the completion of the acquisition. Once we had confirmed those companies, three were chosen. Thereafter, we narrowed in on the strategy that led to and/or facilitated the acquisition and its outcome.
Part
03
of five
Part
03

US-Based Company Acquisitions-Part 3

From 2017 to 2019, the United Kingdom's EG Group acquired 1674 convenience stores from five US retailers and re-branded them as EG America. Hong Kong-based Vistra acquired Boston-based Radius in 2019 and renamed it Vistra. In 2019, Japanese Tadano Group acquired Demag brand from Terex and renamed it Tadano Demag.

EG AMERICA

Overview

Brand strategy

Brand strategy outcome

VISTRA

Overview

Brand strategy

Brand strategy outcome

TADANO

Overview

Brand strategy

  • The Tadano Group changed the brand name and identity of Demag to mirror its brand by rebranding the company to Tadano Demag.

Brand strategy outcome

Part
04
of five
Part
04

US-Based Company Acquisitions-Part 4

Canadian company Gildan Activewear acquired and rebranded American retailer American Apparel in 2017. Despite an extensive search, insufficient information exists to provide further examples in which a US-based company has been acquired and rebranded into something entirely new.

Gildan Activewear and American Apparel

  • In 2017, Canadian retailer Gildan Activewear announced its acquisition of US-based American Apparel.
  • American Apparel had filed for bankruptcy twice in the two years prior to the deal, and Gildan Activewear purchased the brand's intellectual property during the bankruptcy proceedings.
  • The rebranding aims to transform the retailer from controversial, hyper-sexualized advertising to empowering young women through its brand.
  • The transformation also included shifting to an entirely virtual store instead of brick-and-mortar stores.
  • Another part of the rebranding strategy included finding ethical, globally sourced manufacturers instead of the brand's traditional, but expensive, American manufacturers.
  • The rebranded American Apparel has launched a new activewear line that is publicized by diverse models and influencers.
  • In the media, the rebranding has received mixed reviews about the ethics of their current manufacturing process, and positive reviews about their new focus on empowerment.
  • Gildan Activewear's stock price has increased by around $10 since the acquisition.

Research Strategy

Our team began by conducting a search of business news outlets and marketing publications for information on Canadian acquisitions and rebrandings of US companies. This search led us to the acquisition of American Apparel but failed to result in further examples that fit the parameters of the request. Furthermore, in the case of American Apparel, the name of the brand has remained the same, although it has undergone significant rebranding following the acquisition by Gildan Activewear. Because of the scope and significance of the rebranding, we decided to include it in the findings. Additionally, we provide an estimate in our findings that the Gildan Activewear stock price has increased around $10 since the acquisition. This estimate comes from comparing the stock price in February 2017 ($25.86), when the deal was closed, to the stock price on September 17, 2019 ($36.81).

Next, we attempted to triangulate an answer by reviewing a list of Canadian companies that had acquired US companies. This information is available through the Institute for Mergers, Acquisitions and Alliances (IMAA). We reviewed 11 major acquisitions but failed to find an example that fit within the parameters of the request. In some cases reviewed, the acquired company had kept its brand (for example, in the acquisitions of GE Antares Capital, John Hancock Financial Services, Burger King, and Weekend Unlimited). In other cases, the acquired company changed to mirror the parent company (for example, in the acquisitions of Spectra Energy, TECO Energy Inc, General Electric Capital, Glamis Gold, and Commerce Bank). In another case, the parent company changed its name following the acquisition (for example, Columbia Pipeline Group).

We attempted a different strategy to triangulate an answer based on further data from the IMAA. We determined that the UK, France, Germany, and Japan are among the countries that host the most frequent purchasers of American companies. With this information, we conducted a second search of news outlets and marketing publications for information on acquisitions and rebrandings of US companies by companies from these countries. This search led us to Bayer's purchase and rebranding of Monsanto.

Finally, we attempted to triangulate an answer by focusing on American companies that had been acquired by foreign companies. We created a list of examples of this situation and then researched each one. Again, we failed to find an example that suited the request. Instead, we found acquisitions in which the parent company adopted the acquired company's name (for example, in the acquisition of Allergan). We found several examples of the acquired company mirroring the new parent company's brand (for example, in the acquisitions of Monsanto, Actavis Generics, and Baxalta). Lastly, we found other cases of the acquired brand remaining the same after the acquisition (for example, in the acquisitions of RJ Reynolds Tobacco Company and Refinitiv).
Part
05
of five
Part
05

US-Based Tech Company Acquisitions

Riot Games was acquired by Chinese company Tencent in 2015. Chinese appliance company Haier acquired GE appliances in 2016. In 2017, China's Kunlun acquired social media company Grindr.

GE APPLIANCES

Overview

  • General Electric is an American manufacturing and technology leader that has been facing financial challenges over the last five years. In the quest to improve its bottom line, GE sold its appliances division to Chinese company Haier for $5.6 billion in 2016.

Brand strategy

  • After the acquisition, Haier undertook changes to the brand name, but the look and feel were refreshed. Haier added, "a Haier company" at the bottom of the original logo of the brand name of GE appliances. It also set up a new website for GE appliances as it was formerly hosted under the GE website.

Outcome of brand strategy

  • However, at the time of the acquisition, several of GE appliances divisions were loss-making that necessitated job loss. The job losses at GE appliances attracted negative press including the Wall Street Journal and WDRB.

RIOT GAMES

Overview

  • Chinese tech firm Tencent acquired Riot Games in 2015 after acquiring a majority stake in the company in 2011.

Brand strategy

  • In the acquisition of Riot Games. Tencent kept the Riot Games brand the same as before the acquisition

Outcome of brand strategy

  • The lack of change in Riot Games brand attracted positive press from US media including from Tech Crunch and Verge. Largely, the acquisition received negative press as a result of being an acquisition by a Chinese company but was not driven by the lack of a brand change.
  • Before the full acquisition, Riot games had acquired a majority stake that had reduced the impact of the news of the full acquisition. Riot Games acquisition had a negligible impact on Tencent's valuation as it was a $400 million acquisition whereas Tencent was valued at $155 billion in 2015.
  • However, Riot Games have had a rocky relationship since the acquisition regarding the overall marketing strategy. Tencent has pushed for Riot Games to make a mobile version of its top game, League of Legends, but Riot Games declined to make the game. Tencent went on to launch a similar mobile game on the Chinese market that attracted the ire of Riot Games due to its similarities to the League of Legends.

GRINDR

Overview

Brand Strategy

  • After the acquisition of Grindr, it was kept exactly the same as before the acquisition.

Outcome of brand strategy

  • The acquisition of Grindr received mixed reviews. It received positive reviews from US news media such as Venture Beat and New Now Next. However, a section of global media such as the UK Daily Mail and the Washington Post noted that given the ownership pf Grindr by a Chinese company it could be subjected to monitoring by Chinese Authorities.
  • In 2019, privacy fears led to Kunlun having to settle with the Committee on Foreign Investment in the United States (CFIUS) to sell Grindr by June 2020. The reports of the investigation and settlement with CFIUS attracted negative reviews by US press such as Engadget and Buzz Feed News.
Sources
Sources

From Part 05