Buffet Does Acquisitions The Right Way
I was going to write a blog about how English based ICI Paints purchased most of America’s large successful paint companies and re-branded those companies to their own ICI DuLux brand. Well I’m still going to write that blog but during my search for information on these ICI acquisitions I discovered Buffet’s Berkshire Hathaway bought my favorite paint company – Benjamin Moore.
Buffet has the knack to recognise great companies like Benjamin Moore and purchases them allowing them to operate as though nothing changed. He doesn’t reinvent them or re-brand them under a new name. If you are a customer of one of the companies he buys, you will never know a difference in the product you are used to buying. You won’t see the name changed to Berkshire Hathaway or some other Buffet company. You also won’t see the company downsized immediately to make more money for Buffet. You won’t have disgruntled executives upset that they were purchased by a conglomerate. They will actually be excited to be part of Buffet’s companies.
ICI Paints Show How To Fail In Acquisitions
ICI on the other hand bought great paint companies like Martin Seynoor, Sinclair, Glidden, DeVoe, Ameritone Paints and more, and then re-branded them into Dulux Paints. After all, in England you didn’t paint, you “Duluxed” They actually thought that Americans would immediately take to the Dulux name and America will know what Brittain’s had know for years about paint. The Brits can continually show a streak of stubbornness and cockiness that is legendary. This ICI acquisition of these great American paint companies and the arrogant belief that American’s will love DuLux just because the Brits do certainly bears that out.
For instance, in the West ICI bought the very successful regional paint company Sinclair Paints. In the west Sinclair Paints was a major competitor to another Western regional paint company Dunn Edwards. After ICI bought Sinclair they changed the name to ICI Dulux and lost most of the long time Sinclair customers. In the Midwest they took over DeVoe Paints and did the same to those successful stores. One failure after another.
Sales Call From ICI Sales Rep “Why don’t you buy from us anymore?”
I got called from a salesmen for ICI several years after they acquired Sinclair and he told me they were calling all the old Sinclair contractors to see why they don’t buy their paint anymore. I told him the painters learn to rely on the characteristics of paints and when they are no longer familiar you buy the ones that are, like Dunn Edwards. ICI’s acquisition of Sinclair Paints, and changing the name and products to DuLux was a big mistake for ICI. But it was a boon for Dunn Edwards because it drove the painting contractors from Sinclair to Dunn Edwards and ICI was never able to get them back.
ICI Becomes Glidden Professional
Now DuLux was a quality product. It was comparable to any of the top paints out there but it could never get name recognition and years after the acquisitions had mostly failed – and there was no way to build these successful companies back to what they once were – they sold the paint division to a Dutch company, Akzo-Noble. Then Akzo-Noble did a smart thing. They knew after all ICI’s failed effort to make DuLux a recognizable name that something had to change. So Akzo changed the name of all ICI DuLux Paint stores to something more familiar to American’s - Glidden Professional. All the stores received new labels for many of the products labeled DuLux. The applied the new labels to the old DuLux cans and now the paint was magically called “Glidden”. The paint was still the same but the label now read Glidden – something very familiar to the American painting contractor. Time will tell if it works.
Something that is very hard to understand about corporate takeovers is that you would think companies would remember the old cliche, ”imitation is the sincerest form of flattery” and follow Buffet’s very successful business model and lay off the failed business model of companies like ICI Paints. Had ICI kept everything in place at Sinclair in the style of Buffet, customers would have never noticed. But the corporate bean counters saw savings eliminating duplication. They forgot something though. You still need customers.
Thank goodness ICI never got Benjamin Moore!
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