Whereas so many merger projects attract criticism from either the financial media, regulatory authorities, politicians or competition,
the case for a merger of Thomas Cook and Co-op’s travel businesses is so plain to see and makes such obvious sense that the only voice
of dissent appears to be a rather timid statement by the Usdaw trade union. Yes the combined group will become the largest of its
industry in Britain, but regulatory authorities are unlikely to do anything that would prevent the merger from going ahead or reduce
its scope as the current move is all about strengthening two of the better players within an industry that has recently lived through
some of its darkest moments.
In a year during which so many families and business travellers had were stranded abroad or were left camping in airport terminals as their airline carrier or travel agent declared bankruptcy, politicians will turn a blind eye on the loss of many jobs and will welcome the emergence of a full service provider that will provide its customers with peace of mind and never default on them.
So should we all unreservedly applaud the forthcoming merger of Thomas Cook and Co-op’s travel businesses? As a specialist in pan-European post-merger integrations, I feel that this merger is symptomatic of a most unfortunate syndrome in today’s business world, which is that companies appear to apply rigorous financial and economic discipline only when the going really gets tough, and allow themselves to grow a little fat when all is well. Nobody can blame the Management of Thomas Cook and Co-op for seeking to cut costs by £ 35 million per annum by combining resources to offer their customers a similar service in a better organised manner. The real question is to know whether this could not have been done already a few years ago. Had this for example taken place in 2007, those savings could already have benefited their shareholders or been invested in further business growth initiatives. But now in 2010-2011, the individuals who will be affected by the job cuts will need to cope with that blow precisely when it will hurt them most: when markets are down, job prospects are low, and the general gloom in the media makes it difficult for anyone to hang onto something positive which would provide mental energy and resilience, which is what the people dropping out of Thomas Cook or Co-op would need now to help them in their struggle to find another job and rebuild their lives.
No doubt there will be a number of other similar mergers resulting from the shake-out of the markets, and for some of them it might be too late because marrying two companies that are on the brink of disaster often accelerates their demise rather than saving them. At least the Thomas Cook and Co-op initiative brings together two sound businesses and the prospects for the future combined company will be excellent compared to many of their competitors, so we can be tempted to say “better late than never”. Co-operative Group’s CEO Peter Marks’ comment that
"This is really about job creation and protection” sounds odd at first when his company is about to let go of a number of people, but he is right: it’s all about saving and reinforcing the core of the business now to avoid even further pain later on….
I would like to think that senior managers will learn from the current economic crisis and consider financial discipline and the ruthless pursuit of business efficiency as an on-going discipline rather than as a set of corrective actions to make up for having procrastinated in making tough decisions in a timely manner, because however tough those decisions may be, they would be more acceptable when their consequences are easier to bear.