The most powerful brands in the world, based on name recognition and earnings, usually take decades to create. The most fertile period of brand creation in America lasted from the 1880s to 1920s. Ford, Marlboro, Coca-Cola, AT&T, Colgate, and JP Morgan are just a few of the world’s most well-known brands that were launched during that period.
Many of America’s most famous brands have been sold to foreign companies. Some corporations based overseas sought access to US markets and used acquisitions to accelerate the process. The purchase of the IBM ThinkPad brand by China-based Lenovo and the buyout of Firestone by Japan-based Bridgestone allowed each of the acquirers to obtain large revenues in the US . It would have otherwise taken the companies years to launch their own American brands.
Some of the attempts by foreign companies to move into the US market through acquisition have been failures. One of the largest recent catastrophes was the “merger” of Chrysler with German-based Daimler-Benz. Daimler management quickly took control of the new firm and hoped to use the Chrysler dealer network and Daimler engineering prowess to gain a larger share of what was then the world’s largest car market. The plan was a spectacular failure. Chrysler was sold by Daimler to private equity interests and went bankrupt two years ago. Chrysler’s management is now controlled by Italian car company Fiat.
Companies that buy famous brands take a fairly simple risk: can they trade on the good will that the brand has gained with consumers over time. Whether this works relies, to a large extent, on the amount the acquirer pays for the brand, as would be expected. The accounting profession has even fashioned a term used to describe the purchase of a company for much more than its hard assets and short-term cash flow. “Goodwill” is defined as what a buyer pays beyond “prudent” value, often in terms of reputation or brand equity – things which cannot be measured with perfect accuracy through a normal financial analysis.
The list below is the 24/7 Wall St. selection of fourteen iconic American brands which have been bought by foreign companies. Most of these transactions seem to have been successful, at least to the extent that all the brands still exist and have significant sales. The purchases acted as conduits to consumers that the buyers would probably not otherwise have had.
The history of these brands stands as a reminder that acquisitions can be successful. For that reason, the purchase of premium brands remains and will almost certainly remain a permanent part of the M&A landscape.
1. Budweiser Invented in 1876, Budweiser has long called itself The Great American Lager. The legitimacy of this claim has come into question, however, since the beer’s St. Louis-based owner, Anheuser-Busch, sold the majority of its stock to the Belgian-Brazilian brewing company InBev. The brand is now technically owned by Anheuser-Busch InBev N.V., which is based in Leuven, Belgium.