There are intermediate arrangements between direct competition and takeovers. Through joint ventures or partnerships, companies join forces while retaining a degree of independence. This type of merger, also known as a quasi-merger, allows companies to rapidly increase their market share and pool their costs. Here’s an analysis by the experts at AURIS Finance, a consultancy specialising in mergers and acquisitions.
Ankura, a consultancy firm, has come up with this figure. While corporate acquisitions stagnated in 2023, despite some mega-deals, the number of joint ventures and partnerships increased by 40% over the year. Quasi-mergers are now a growing trend in M&A, particularly in the technology sector, where innovation is advancing exponentially. According to The Economist, quoted by Le Nouvel Economiste, we are in an era of quasi-mergers: “With trade barriers multiplying, interest rates remaining high and regulators still wary of takeovers, these types of partnerships are becoming the best way to expand a business empire,” says the British business magazine.
Cooperation between giants
For example, giant Disney recently formed a joint venture with rivals Fox and Warner Bros Discovery. This joint venture has led to the creation of a new service for streaming sports programmes. In a similar vein, Microsoft has joined the ranks of the leading creators of artificial intelligence models. The IT multinational has a minority stake in OpenAI, the maker of Chat-GPT, as well as in the French company Mistral AI and in G42, an AI specialist based in the United Arab Emirates. Apart from artificial intelligence, the automotive sector is one of the most fertile grounds for cooperation agreements, as demonstrated by the Renault-Nissan alliance, which has been in operation for more than 25 years. In this sector, quasi-mergers will intensify in the coming months, driven by the shift from internal combustion engines to electric vehicles. Moves are already underway: Japan’s Nissan and Honda recently announced that they are considering a strategic partnership to develop electric vehicles. An agreement that would, among other things, allow costs to be shared.
Bypassing the regulators
Joint ventures involve two or more companies working together to achieve specific goals, such as developing a new product or entering a new market. In addition to the synergies, these transactions are more likely to pass regulatory muster than acquisitions. In fact, joint ventures are often seen by regulators as pro-competitive and designed to promote innovation while pooling costs. As the acquisition is not a full takeover, the antitrust authorities are less reactive. However, all such transactions are subject to close scrutiny by the competition authorities.
Our experts at your service
Following in the footsteps of the economic giants, many smaller entities are considering strategic partnerships that will enable them to gain market share or pool costs for the purposes of innovation. For these operations to be fully successful, it is essential to plan and organise them in advance, with the help of experts who can guide you through each stage of the process. AURIS Finance’s experts are specialised by sector. They can help you develop your business.
