I watched an interview at lunchtime today on the BBC News channel where Roger Carr, chairman of Cadbury, was being asked a number of questions concerning his companyâ€™s position as it confronts a hostile takeover bid by Kraft Foods.
Towards the conclusion of the interview, Carr said something most interesting in response to a question by interviewer Simon Jack about expected synergies if Kraft succeeds:
Synergies is a euphemism for heavy cost cuts.
Thatâ€™s probably what anyone whoâ€™s been through synergies following an acquisition has experienced, whether hostile or otherwise.
I certainly have, in a previous life. And Iâ€™ve lost count of how many times Iâ€™ve used the word â€˜synergiesâ€™ when writing press releases and executing other communication to suggest the positiveness of a new combination and the great things that are expected as a result and especially because of synergies, with nary a glimmer of anything to suggest a different reality.
That reality nearly always does involve cuts, not only financial but also people. I donâ€™t think you should be surprised at such an eventuality when two or more firms comes together. I just wish there were greater corporate honesty about what to really expect.
Whether or not Kraft succeeds, and whether or not their doing so may result in â€˜synergies,â€™ I applaud Mr Carrâ€™s honesty. I hope his shareholders and employees appreciate it.