Coopetition in a failed merger project: why two French companies called it quits

Abstract

Purpose

Coopetition includes cooperation and competition, sometimes simultaneously, among firms from a specific industry involved in a merger and acquisition (M&A) operation. However, despite their high number, most mergers end in failure. Therefore, looking at how firms cooperate and compete when planning a merger operation can be a key to better understand post-merger integration, set achievable synergies for both parties and better understand the organizational culture of both companies. Also, external events in a rapidly changing environment can affect the global strategy of organizations and impact the desire for firms to engage in mergers and acquisitions.

Design/methodology/approach

The author investigates how merger negotiations were conducted and influence coopetition among two firms engaged in such an operation. The author describes the project merger of two French companies using longitudinal data.

Findings

This in-depth case study provides new insights into coopetition dynamics during merger negotiations and the influence of a global crisis on the overall strategy of two firms. The authors specifically detail how cooperation and competition were present in M&A negotiations and how the rapidly changing environment influenced the planned operation. First, cooperation was privileged as companies enhanced information sharing and communication for their joint strategy. Then, with the evolution of the environment, new opportunities were given to the target company, which decided to quit the merger project. Therefore, both firms engaged in a competitive context as the crisis helped the target company (in difficulty at the beginning of negotiations) to develop new projects and to become a real rival of the acquiring company in its local ecosystem.

Research limitations/implications

The limitations are those concerning a single case study.

Practical implications

The study highlights the complexity of merger negotiations and the unexpected events faced by integration stakeholders. The analysis, thus, contributes to an inclusive and integrative view of the challenges in the merger process. The study questions coopetition issues in regional clusters as both firms operate in the same industry in the same region. For practitioners, the study questions how to balance the risks and rewards of coopetition activities over time. The case addresses information sharing in coopetition projects and the fear that the data and information revealed during negotiations will affect the company’s competitive advantage once the merger plan is abandoned. In the context of the rapidly changing environmental crisis, managers will reflect on continuing to cooperate with their competitors or pursuing their activities on their own.

Social implications

Despite their high number, M&A failures remain surprisingly high. This study explores how stakeholders deal with merger negotiations and how external events impact such negotiations and merger projects by raising coopetitive tensions among firms.

Originality/value

The case provides a vivid illustration of firms’ adaptation to a rapidly evolving context due to a global crisis. The research questions coopetition in business ecosystems and the unexpected in merger processes. The study addresses critical risks in knowledge exchange during merger negotiations and coopetitive dynamics among stakeholders over time. Theoretical concepts and empirical findings from the literature are combined to present a single consistent picture.

Citation

Thelisson, A.-S. (2023), "Coopetition in a failed merger project: why two French companies called it quits", Journal of Business Strategy, Vol. 44 No. 1, pp. 44-49. https://doi.org/10.1108/JBS-06-2021-0102