Corporate matches made in heaven are rare occurrences.In many cases, merger and acquisition analysts find more fault than forte in company unions.
Opponents of the much-hyped merger between Hewlett-Packard and Compaq, for example, deride the deal as an exercise in futility.Similarly, some industry watchers puzzle at theviability of Ameritrade’s US$1.3 billion purchase of rival Datek Online Holdings.
“It is consolidating a market,” GartnerG2 researchdirector David Schehr told the E-Commerce Times,referring to the Ameritrade deal. “The question is, isit the right market [to consolidate]?”
In e-business, most analysts contend that the bestpartnerships blend virtual and physical sales channels.
One such “dream merger,” according to some analysts, almost became reality two years ago.
Before eBay grabbed the e-commercespotlight, Yahoo! was eyeing the auction site as an acquisition target.
“Yahoo! is now trying to replicate some of eBay’sprofitability strategies,” Morningstar.com analystDavid Kathman told the E-Commerce Times. “A merger would have given Yahoo! a huge revenuestream not dependent on advertising.”
In addition, Kathman suggested, eBay would have gained access to Yahoo’s vast userbase and perhaps would have enjoyed even greatersuccess than it subsequently achieved on its own.
Had it not been for minor deal breakers involvingexecutive appointments, Yahoo! might have punched anearly ticket to sustained profitability.
Now, though, as eBay continues its skyward march and Yahoo!plods through hard times, a merger seems unlikely.
“EBay would have to take on Yahoo’s liabilities, whichcould slow down its growth rate and hurt itsprofitability,” Kathman said. “EBay would [have tostructure the deal] for some longer-term benefits.”
The Big One
E-tailers and other e-businesses may be best served bypursuing partnerships with brick-and-mortar companies,analysts agreed.
“The best e-business mergers are with ‘p-businesses,'”Schehr said, alluding to physical companies.
In this vein, analysts said they can envision a largetraditional retailer like Wal-Mart or Target snatchingup e-tail powerhouse Amazon.com within five to 10 years.
“Wal-Mart has had various e-commerce sites, but nonehas taken off,” Kathman noted. “Amazon could [giveWal-Mart] the dominant online retailing presence.”
No Sure Thing
Likewise, Target — which is already in cahoots with Amazon –could stage a similar coup.
In either case, Amazon would secure a more stablefuture, rather than remaining in the still-uncertainrealm of pure e-tail.
Clearly, though, Amazon has become an e-tail model and may endup as one of a very few pure-play e-tailers, according toKathman. The company is not likely to entertain suitorslike Wal-Mart or Target unless its fortunes take anabrupt turn for the worse.
“Amazon is only seven years old,” Kathman added. “A lotcan happen in the next five to 10 years.”
All in the Family
In these days of multichannel retailing, someintra-enterprise mergers — or “spin-ins” — couldbenefit companies that previously divested theirInternet operations.
Multipronged bookseller Barnes & Noble, for instance, could improve its performance dramatically by reabsorbing its online arm, analysts suggested.
In fact, some reports indicate that a buyout already may be in the works.
“Barnes & Noble should never have separated” fromits online arm, Giga Information Group analyst Andrew Bartels told the E-Commerce Times.
“BarnesandNoble.com could leverage multiple saleschannels much more effectively and boost its marketshare” if a merger were to occur, he said.
For their part, Wal-Mart and Kmart each have rolledtheir Web unit back into the main corporation, andSabre Holdings recently boosted its stake in Travelocity from 70 to 100 percent.
“[These roll-ups] make governance and managementeasier,” Schehr said. “To change direction, managersdo not have to check with [minority shareholders].”