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Emerald Group Publishing Limited
Copyright © 2011, Emerald Group Publishing Limited
How Molson Coors deals with the cultural issues surrounding its M&A activity
Article Type: HR at work From: Strategic HR Review, Volume 11, Issue 1
Short case studies and research papers that demonstrate best practice in HR
A common problem in the merger and acquisition (M&A) process is that a lot of managers see cultural implications as intangible, but with M&As taking place in a globalized multicultural market, where corporate cultures as well as national cultures affect the business process, it demands attention. This is something HR can help with. By paying particular attention to a business’s culture pre-deal, the acquisition process can be made smoother and the relationship can take off post-deal. This case study explores this point in further detail by looking at the joint venture between Molson Coors (UK & Ireland) and Cobra Beer to form the Cobra Beer Partnership Ltd.
Operating within a global framework
Molson Coors is Britain’s biggest brewer, with a brand portfolio that has a truly global footprint. Responsible for big beer brands such as Carling, the UK’s best selling lager, Coors Light and Cobra, the company has acquired a workforce that spans the globe and as such is influenced by the diverse mix of cultures, people and skills this international outreach provides.
In early 2009, we created “Our Brew,” which is a global cultural framework designed to guide the business to long-term success and act as a compass to keep the company aligned, with everyone from Canada to India pulling in the same direction. The Our Brew philosophy plays a key role in any M&A activity Molson Coors is undertaking and emphasizes the key role HR plays in the due diligence process when a business is buying not only a product but people.
East meets West in M&A deal
In 2009, Molson Coors entered into a joint venture with Cobra Beer, saving the premium Indian lager from financial collapse and taking on an entirely different business culture in the process. Cobra Beer was founded in 1989 by Cambridge graduate, Lord Karan Bilimoria, when it became clear to him that Britain needed a smoother, less gassy lager that appealed to both ale drinkers and lager drinkers alike. Cobra Beer was created in Bangalore, India, and like most businesses that derive from the East followed the family orientated business model that stems from an Indian culture.
After an aggressive growth strategy, Cobra successfully broke into one of the most competitive beer markets in the world, with its first shipment imported to the UK in 1990 at the start of a recession. Unfortunately it was another recession where Cobra struggled, going into administration in 2009 and saved by Molson Coors paying £14.1 million for 50.1 percent share in a pre-pack administration deal. It was during this deal that the relationship between the two companies was forged, with HR playing a key role in making sure that relationship was positive.
First impressions are everything in business, especially when you’re dealing with an entirely different business culture such as that in India. Representatives from Cobra needed to feel respected from the start, to give them reassurance and put their minds at rest so they were safe in the knowledge that the workforce was in good hands. The Molson Coors HR team was involved in the negotiation process from the beginning, as all sides acknowledged the deal was as much about people as the product or service. Twenty-one ex-Cobra employees were transferred into the Cobra Beer Partnership and have played an integral role in the ongoing success of the partnership.
HR leads the integration process
The people skills HR professionals bring to the table are instrumental in building relationships between businesses in the early stages. With the Molson Coors HR department sitting in on the discussions, communicating with the Cobra team and discovering their HR needs and merging their terms and conditions with that of Molson Coors, it ensured Cobra employees did not feel like a commodity being traded. As well as the practical uses, HR professionals are also good at reading people, an important skill in initial talks as the team at Molson Coors was able acknowledge a different business culture and embrace that culture within the negotiation process.
To fully integrate the companies post deal, Molson Coors had to implement various practical processes to ensure a smooth transition. It sent the HR team on a cultural learning exercise for a day, to learn about Cobra beer, its corporate culture and the Indian culture it originates from. Educating the team helped to eradicate the ignorance that could have taken place in the face of two cultures merging and helped create a successfully united company. This synergy has led to Molson Coors embracing the Cobra business practice and allowing the Indian business to maintain its culture throughout its business processes.
Molson Coors’ HR role in Cobra recently changed from being transactional to supportive, further tightening the proximity with any M&A activity. In supporting specific areas within the business, HR partners are able to offer an expertise within that sector, meaning a HR business partner working for Cobra would be given the time needed to fully understand the Indian culture and deploy their HR skills base alongside their knowledge of that culture.
A three pillar approach to cultural integration
The culture instilled from the Molson Coors Our Brew philosophy assisted in dealing with the HR issues surrounding the Cobra Beer Partnership and follows a three-pillar approach. Firstly, employees at Molson Coors are taught to challenge the expected and are prompted to ask questions no one else can. This meant they looked in-depth at the Cobra business model and the Indian cultural values surrounding it. By learning about the Indian culture, they gained detailed insight in how to learn from the business influenced by it and how best to extract the unique tacit that the Cobra business possesses. This is a fundamental point in any M&A, as quite often businesses ignore each other’s culture and subsequently create a barrier in learning from their core competencies. By encouraging Molson Coors employees to actually learn about the company they were acquiring, the HR team not only increased overall productivity but created a mutual respect between the businesses.
Secondly, Molson Coors places great importance on personal accountability and seeks to highlight the need for employees to take responsibility in making sure they deliver results. This is pivotal when learning about culture pre-deal, as employees at Molson Coors felt a personal connection and desire to learn about the Cobra culture, ultimately enabling a smoother business process with the onus falling on each individual to pull in the right direction. When combined with the third pillar of the Molson Coors’ culture, ensuring all employees are united in the same purpose, the overall aim to create a portfolio of extraordinary brands that delight the world’s beer drinkers became a reality, as we successfully acquired Cobra Beer.
All the hard work the HR team did pre-deal in learning about the corporate culture of Cobra and the Indian culture it stemmed from, combined with the skills they brought to the table in the negotiation process by creating a mutual respect between the parties and, finally, the efforts the team went to post-deal helped pave the way to a successful merger. A survey compiled after the acquisition revealed a 98 percent engagement between the two beer brands. This joint venture added to the impressive track record Molson Coors already has in building leading brands, with the Cobra Beer Partnership posting profits of £4.9 million in 2010.
Katie ReevesBased at Molson Coors.
About the author
Katie Reeves is a HR business partner at Molson Coors UK. She has worked at Molson Coors for two years, having previously worked for 11 years in HR at Homebase and has recently completed a CIPD post graduate course in Talent and Career Management. Katie oversees the Molson Coors and Cobra partnership and is accountable for making sure the joint venture remains successful from a HR prospective. Katie Reeves can be contacted at: firstname.lastname@example.org