Mergers & Acquisitions – Profit or Loss

Common sense dictates that one is in the M&A business to generate synergies, cut costs, increase efficiency, benefit from economy of scale.

There used to be two independent UK companies that were leading brands and profitable. Very profitable. The AA and Saga need no introduction.

Along comes a company with a name you have never heard of “Acromas”. It bought both the AA and Saga. It has just published its accounts for the year to January 09. Acromas made a pre-tax loss of £506m. This was caused not by trading in road-side assistance or holidays for the over 50’s or financial services. It was caused by an interest bill just north of £700m.

Acromas has debts of more than £6bn. Common sense aint so common.

jgs- 2009

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