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When a culture clash can cloud a merger

In the winter, my old boss would turn down the thermostat and tell the staff to “put on a sweater like they do in the French office.” He was the CEO of the French company, and since he only visited the U.S. subsidiary a few times a year, the American staff found his Francophile ways to be quirky and endearing.

However, from my vantage point as the CEO’s liaison in the U.S., I could see how the French and American management styles could have created a culture clash derailing our corporate objectives.

I have been thinking a lot recently about the impacts of “country culture” on corporate culture. For the past year, I’ve witnessed a significant uptick in calls from Indian companies that want to make U.S. acquisitions. North American markets are more stable than many other regions around the globe. Plus, lots of Asian companies are flush with cash and want to diversify geographically.

So the recent news flow of large Asian companies acquiring large U.S. companies isn’t surprising. Last month, China’s Shuanghui International announced a deal to acquire Virginia-based Smithfield Foods for $4.72 billion, making it the biggest Chinese purchase of a U.S. company to date. Earlier this month, India’s Apollo Tyre announced their acquisition of Ohio-based Cooper Tire & Rubber in a deal that would value Cooper’s stock at $2.2 billion, one of the biggest Indian acquisitions of a U.S. company.

There have been a number of domestic U.S. mergers and acquisitions that failed due to corporate culture clashes and turf wars. So how will these international companies overcome the added layer of country cultural disconnects? Can the two sides come together to implement a post-integration plan and become a stronger entity for it?

Or will these deals go the way of Quaker Oats’ acquisition of Snapple for $1.7 billion, which Quaker Oats sold 27 months later for only $300 million? Or the consolidation of AOL and Time Warner, which eventually dropped the “AOL” from it’s name supposedly because of internal acrimony between its executives. Or Sprint’s acquisition of Nextel, which was unable to leverage synergies because Sprint was reportedly too bureaucratic for Nextel’s entrepreneurial culture.

I’m looking forward to following these two big deals and track how the culture wars play out – stay tuned!