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Page last updated: 21 September 2012

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Title: How Stellar revealed the lack of fit between AA and British Gas
Date: 01/02/2006
Category: Reports and White Papers
Overview: Corporate growth has increasingly been achieved through mergers and acquisitions, by moving existing product brands into adjacent markets, or by developing brand extensions and new products that extend the franchise. Together these can be referred to as ‘adjacencies’. The low success rate of mergers and acquisitions is now notorious, and research suggests that the in-house development of adjacencies fares little better. Setting aside the (usually one-off) savings from synergies, the issue comes down largely to the fact that the proposed adjacencies, whether bought in from outside or generated internally,are often not adjacent enough. They simply fail to align congruently enough with the core value of the ‘parent’ company. The demerger of AA from Centrica illustrates a tool that can help. Stellar enable our research team to identify the lack of fit and recommend a demerger months before it went public in 2004.

Document: centrica_adjacencies_and_the_aa.pdfDownload (76 KB)

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