In Focus: The same, but different
Two of the big beasts of East Midlands business reported huge rises in profits this week, against a backdrop of continuing uncertainty. Whilst others around are floundering, what are RMS Tenon and Travis Perkins doing that others aren’t?
It’s seemingly simple: they’re either merging with or acquiring other businesses operating in their sphere to create room to grow. Stifling the market by remaining in glorious isolation is old news, it seems, and both of these dynamic outfits have realised that.
Here’s the science bit: In 2009, Tenon merged with RSM Bentley Jennison and completed its purchase of certain assets of the Vantis group in June 2010. This gave the newly formed company not only room to grow at a local level, but also the vast opportunities that came with RSM’s overseas network, RMS International - a crafty move covering the top and bottom of the market.
Travis Perkins spent much of last year engaged in a bureaucratic battle to buy Leicester plumbing and heating giant BSS. When the deal went through in the middle of December last year for a whopping £799m, Travis Perkins could add probably claim to have the plumbling supplies market cornered. There’s also the odd saving of £25m it’ll make by snapping up BSS, as it slowly begins the process of integrating the company.
Synergy is the buzzword when these deals happen. RSM Tenon says it will save £10m this year following the merger. Travis Perkins, to paraphrase the Carpenters, have only just begun.
There’s a certain perpendicularity to these two deals. Tenon had been looking to merge for a while, in order to create vast new opportunities for itself.
Back at the beginning of 2009, Alistair Wesson, at the time Tenon’s regional managing director for the said: “This deal is a combination of the two most substantial entrepreneurial businesses in our industry. It is the beginning of a new era of opportunity and growth for our teams and provides us with an excellent platform from which to challenge traditional approaches to client focus and service delivery.”
And it seems that’s worked.
For Travis Perkins, the work has started in earnest. In a statement released this week, the company said: “The integration programme has commenced, but it is too early to provide any further meaningful insight about the synergies available to the Group. However, it is clear that achieving the target will require a substantial effort from teams across the business and in particular the allocation of considerable resource to, and investment in, supply chain and IT. We aim to provide an update at the interim stage this year with our progress on achieving these synergies.”
Two companies, then, and two deals; very different, but so alike. Maybe others could learn from them.
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