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Properly announcing a merger or acquisition is an important step in a company's overall strategy, requiring careful management while events unfold at a frenzied pace, a veteran of the process says.
The 1997 announcement of The General Accident Assurance Co. of Canada's purchase of Canadian General Insurance Co. led to free publicity that would have cost General Accident hundreds of thousands of dollars had it purchased similarly positioned advertising, said Diane A. Scott, communications manager for Toronto-based General Accident, a unit of General Accident P.L.C.
As a result, good media relations are critical in a merger, she said.
Under an agreement struck with Canadian General's former owners, General Accident had four days to complete the due diligence process, beginning on Oct. 13. Ms. Scott was first briefed about the deal two days later, she said. The scramble was on to develop a communications plan for notifying the board of directors, strategic partners, employees and other stakeholders, and the press, she explained during a session at the recent Insurance Marketing Communications Assn.'s annual meeting in Vancouver, British Columbia.
"It is worth emphasizing that, due to the confidentiality, I did not know the name of the vendor company until 4 p.m. in the afternoon of the 17th," she said. "The communications plan was completely developed using code names."
The need to get concise information to all employees at the opening of business on Oct. 20 was deemed critical. But the task was complicated because General Accident's parent company is publicly traded, and under a legal requirement, an announcement was to be made the same day at the opening of the London Stock Exchange.
That meant it would be possible for the Canadian press to pick up the story from wire services in time to deliver it to General Accident's employees as they commuted to work.
To help mitigate the impact on employees, the communications department created individual kits for all workers. The kits contained information aimed at helping employees understand how the transaction would affect them. Included in the kits were Canadian General annual reports, answers to potential questions and letters from both company presidents.
Also, it was established that the 10-member due diligence team -- because of the need for strict confidentiality, they were the only company representatives who knew of the merger in advance -- would go to company sites across Canada to make the announcements, including the company's intention to downsize by 500 employees.
"Within 72 hours of the completion of due diligence, we had 2,300 information packages complete and a team deployed across Canada," Ms. Scott said. About 2,200 brokers were contacted with the help of a faxing service.
After the announcement in London, Canadian journalists were notified early in the morning, local time, by the insurer. The trade press was advised that leaders from the two companies would hold personal and telephone interviews.
General Accident wanted the insurance trade press to have time to ask all questions, Ms. Scott said, "but also provide us with an opportunity to clearly outline the details of the merger itself and General Accident's leadership position within the Canadian P/C industry."
The company that emerged is now named General Accident Group. It is the largest property/casualty insurer in Canada, with business units writing commercial and personal lines. Prior to the acquisition, General Accident had a 5.6% share of Canada's market and was ranked fifth among Canada's 10 largest insurers. The company now has a 7.8% market share.
General Accident's media handling strategy included advising all employees that Executive Chairman Howard Moran would be the only spokesperson. Also, every effort was made to ensure that Mr. Moran was available at the publicized times.
"This process assisted with ensuring that consistent, accurate information was released and represented some $400,000 worth of free, positive publicity," Ms. Scott said.
The merger received coverage by all national print and radio media and on business television reports. Accounts of the merger appeared in newspapers in 35 cities, she said.
A three-month premerger period followed the initial announcement. There was a lot of activity during that time but little to announce. Nevertheless, it was that situation that taught General Accident an important lesson about communications during a merger, Ms. Scott said.
"Silence is a disaster," she said. "The silence fed the rumor mill (among employees and brokers) and made the communication job that much more difficult. In addition, our outstanding launch created an unrealistic expectation for future communication."
The moral is that if you have nothing to say, tell everyone that, Ms. Scott advised. Assure them that updates will be provided as soon as information is available. Maintaining close relations with the trade press also helped, Ms. Scott said after her presentation. In that way, there was more trust and respect when she told reporters that she did not yet have the information they sought.
On Feb. 25, while General Accident still was absorbing the earlier merger in Canada, the company announced a worldwide merger with Commercial Union P.L.C. In that case, Ms. Scott was notified 24 hours prior to the public announcement.
The communication steps General Accident took during its purchase of Canadian General have served as a template for handling the Commercial Union merger. Employee kits and notices to brokers also were distributed the morning the CU deal was announced.