Belgacom's Acquisition of Telindus: A One-Way Love Affair (A)

Abstract

This is the first of a two-case series (309-068-1 and 309-069-1). The Belgacom-Telindus cases revolve around corporate strategy and in particular the decision of the corporate parent to grow and expand the company via an acquisition. They lead the student through the dynamics of an acquisition and serve to highlight the different strategic decisions involved before, during and after such a deal. Case (A) covers the pre-deal phase and looks at the strategic rationale, strategic fit and potential synergies. It recounts the unsolicited bid by the Belgian telecommunications operator, Belgacom, for an international information and communications technologies (ICT) network integrator, Telindus, in a highly volatile and consolidating ICT industry. With its traditional core business under threat from new technologies, such as mobile telephony, the profitable Belgacom looks to acquire an integrator that will ensure that its top client base is secured, and possibly assist to better position Belgacom to offer corporate clients advanced communication and network solutions in the future. Due to the hostile nature of the bid, Telindus is shocked and swiftly starts talks with long-term business partner France Telecom. When France Telecom makes a counterbid for Telindus, the nature of the acquisition changes drastically for Belgacom. Belgacom decides to react swiftly and launches a higher bid. One week later, the company reports it has over 90 percent of Telindus shares. Telindus is now part of the Belgacom Group. Case (B) delves into the post-deal phase and the chosen and implemented integration approach, as well as the organisational and cultural fit between the two organisations.