British Steel - Dutch Royal Hoogovens Merger: An Anglo-Dutch Marriage not Working Out?

In 2003, just around three years after the completion of the merger, the severity of the company's problems seemed surprising, especially given the fact that the global steel prices had been on the path of recovery during the past year. The company's rationalization of R&D efforts failed to bring about the desired results.

Restructuring of the UK R&D facilities and closure of a number of steel producing units resulted in large scale labour unrest. This affected productivity and the UK arm of the merged entity continued to show poor results. The cultural mismatch between the two subsidiaries was also a cause of concern for the management...

But the downward spiraling steel prices, the increasing value of the pound, declining demand and the resulting losses, which led to large scale restructuring and downsizing pushed the pace of change faster than the combined entity could absorb. Analysts tracking international mergers and acquisitions pointed out that the disappointing performance of Corus in the post merger period was not untypical of other merged firms. Looking at several previous experiences of mergers, one found that profitability usually failed to live upto the expectations of the management at the time of the merger. But in this case, it was widely believed that better HR management at the time of the merger could have improved the outcome for Corus...