29 Sep Top CIOs get deeply involved in merger deals
Todd Stabenow was on a secret mission.
As he flew from Minneapolis to Paris one morning last year, he considered tactics for getting the information he wanted without revealing the truth about his visit. Land O’Lakes, a giant agriculture cooperative, had hired him the year before to oversee the IT part of mergers and acquisitions. The first step is investigating a target company for major risks—“the big rocks,” as Stabenow says.
He was on the way to Geosys, a French firm that had developed algorithms for analyzing satellite images to help farmers track the health of their crops. Land O’Lakes already owned almost 10 percent of Geosys, and now it wanted to buy the rest. The opportunity to add a new line of business — selling this analytics service to its member farmers — was enticing as a strategic play in the fast-growing “precision agriculture” market.
Land O’Lakes has doubled its sales in seven years, from $7.1 billion in 2006 to $14.2 billion in 2013, and has pledged to offer new tools to its member farmers to help them improve their yields and profits. Stabenow had to find out whether the Geosys technology was solid enough to scale and whether overall IT at the company was sound. Just a handful of top executives at Geosys knew of Land O’Lakes’ intentions; most of the people Stabenow would be interviewing did not. The deal wasn’t definite, so speed and discretion were imperative.
You could soon find yourself in the same situation.
Whether they aim to boost revenues, break into new geographies, eliminate competition or otherwise expand an empire, M&A deals are on the rise. As of July, mergers and acquisitions were up 24 percent in number and 36 percent in value compared to the same period last year, according to FactSet Research Systems.
There’s Valeant Pharmaceuticals’ $53 billion bid to take over Botox-maker Allergan, AT&T’s $49 billion acquisition of DirecTV, Comcast’s proposed $45 billion buyout of Time Warner Cable, and discount retailer Dollar Tree’s $8.5 billion plan to buy rival Family Dollar Stores. After a bidding war against rival Pilgrim’s Pride, Tyson Foods’ nearly $9 billion acquisition of Hillshire Brands is expected to close this month.