General Electric and Suez: Deal or No Deal?
(6 pages of text)
Case (Pub Mat)
On Wednesday, March 1, 2017, Jean-Louis Chaussade, the chief executive officer (CEO) of Suez SA (Suez), a French utility company that primarily operated in water and waste management, had to decide whether or not to acquire General Electric Water & Process Technologies. During the negotiations between Chaussade and the CEO of General Electric Company (GE), there had been many drastic changes, including the January 2017 inauguration of a US president with no political experience and an agenda that did not favour international co-operation. The deal represented a significant investment of US$2–$3 billion, and Suez would have to rely on an external partner to have even a chance of winning the bid GE had launched only a few weeks earlier. The complex negotiations were also fraught with risks due to increasing political interference from the new US president. What should Chaussade do?
This case is suitable for an undergraduate- or graduate-level course on global strategy; mergers and acquisitions (M&A); strategic management; international negotiations; cross-cultural effectiveness and literacy; or leadership. It gives students the opportunity to understand the process of a firm’s competitive actions, such as a response to a game-changing opportunity that could also turn into an unprecedented disaster. Students can also develop an understanding of the influence of macroeconomics on an international M&A and learn how to assess the impact of macroeconomics using different scenarios and exchange rates. After working through the case and assignment questions, students will be able to do the following:
- Identify and understand the opportunities and challenges associated with international negotiations that are strategic, restricted by time, and more complex than expected.
- Evaluate the impact (if any) of macroeconomic, political, cultural, and personal factors on international M&A.
- Assess the financial impact of a large M&A transaction on the finances of a multinational corporation, especially a conservative French utility business.
- Identify and understand the impact of key strategic decisions on a CEO’s career and reputation.
- Evaluate the pros and cons of making a strategic, transatlantic multi-billion-dollar deal under time pressure and without having all the data, while also considering other implications such as potential integration challenges due to cultural and geographic distances.
- Understand growth strategies and their implications in a global business context full of unprecedented change and uncertainty, including increased government interference in business in the United States.
- Discover the international M&A world from the CEO perspective, and understand how international partners can help, if needed.
- Assess the effect of changing industry dynamics and government policies on a firm’s strategic position.
Canada; France; United States, Large, 2017
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