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Buying a business in Romania: cultural due diligence and hidden cultural rules

Three years ago, Heineken N.V. announced the acquisition of the Romanian brewery Bere Mures. This transaction would strengthen Heineken’s leadership in Romania increasing both its market share – 31 percent, and volume to 6 million hectoliters.

“This transaction allows us to consolidate our leading position in Romania. We have a stronger portfolio , more diversified with leading brands and an excellent platform through which we will bring the value and development,” said at the time Nico Nusmeier, Regional President of Heineken for Central and Eastern Europe.

The beer maker in Romania was 90 percent controlled by five players – Ursus Breweries, Heineken, Bergenbier, Tuborg and Romaqua, while small producers accounted for only 10 percent of the market.

What was the reasoning behind the Heineken – Bere Mures deal? The two main players were forced to play the game of market leaders, as an alternative to organic growth, and any strategic movement like M&A was a key determinant in their market positioning. The particular case of Bere-Mures acquisition was not necessarily a desired acquisition, but rather a reactive movement to the market tendencies.

In their turn, the Bere-Mures shareholders sold the company simply because it was the best moment of exiting the market.

On the other hand, the main players Ursus and Heineken, fighting for the first position, were forced to get involved in the process and make a decision. At the moment of the acquisition the market share difference between Heineken and its main competitor SAB Miller was only 1 percentage point, thus the fight of getting Bere-Mures that accounted for 6 percent of the market was very tight with both players negotiating in parallel with Bere-Mures. The improvement in competitive position is one of the main drivers of M&A transactions and this was also one of the main reasons behind the Bere-Mures acquisition.

During the process the two companies used a system called Total Product Management, which is very similar with Six Sigma concept, where Six Sigma can deal with a cultural change as well. “It was necessary to align all the processes of Bere-Mures with those of Heineken Romania,” said Vasile Ciurba, Member of the Board of Directors of Bere Mures.

Another aspect that was considered important was “the leadership style of the Romanian management of Bere-Mures, which was a direct leadership style, the decisions were taken much faster compared to Heineken Romania”. Two different national cultures – collectivist and individualistic ones, were merged into a new organizational culture through successful leadership.

There are various obstacles for international mergers and acquisitions and these can have a tremendous impact on the international workforce and global business operations if not addressed in the early stages.

Obstacles for international M&As in the cultural field include:

?different values,
?attitudes and behaviour between the home and the host culture which can cause misunderstandings,
?client and employee dissatisfaction.

16 Nov. 2011

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