Have you ever heard of Sadie Hawkins Day? A fictional holiday that first appeared in the comic strip L’il Abner, it is the day when single men must run and hide from women.
Why? Because, according to tradition, any woman who catches a man on that day is legally entitled to wed him, whether he wishes to be married or not.
The image of weak and delicate women chasing down strong and powerful men spawned decades of humorous tales in the comic strip. In the business world, though, mergers and acquisitions are usually proposed by large corporations that seek to gobble up smaller competitors, and not the other way around.
And yet that hasn’t been the case for Fiat Chrysler, itself a relatively unusual alliance that was formed in an awkward shotgun marriage during the depths of the global economic crisis of 2008/09. The Italian-American firm has been conspicuously flirting with the much larger General Motors in pursuit of a merger.
Last week, though, GM head Mary Barra firmly rebuffed its embrace. Her rationale? General Motors is progressing with its own corporate turnaround strategy, and shouldn’t be diverted by opportunities that will only produce increases in absolute size. Most industry analysts agree that, except for the inevitable growth that would result from a merger with (or acquisition of) Fiat Chrysler, General Motors would achieve no other significant benefits.
It is interesting, though, that so many recently proposed corporate mega-mergers appeared to offer no benefits, other than increases in size. Did its recently consummated merger with US Airways, for instance, truly improve American Airlines in any other manner? Or would its recently discontinued merger proposal with Time Warner have truly improved Comcast in any noticeable fashion? It is quite difficult to name any business benefits of such consolidations at all, except for those that would result from the elimination of market competition.
Thus, even though Ms. Barra has been castigated for GM’s recent legal difficulties, it might be appropriate to praise her for avoiding a corporate marriage to Fiat Chrysler. By making this choice, Ms. Barra is likely improving GM’s long term prospects and the health of the competitive marketplace at the same time.
Assuming, of course, that Fiat Chrysler CEO Sergio Marchionne decides to drop his amorous pursuit of his far larger rival. If he should continue to pursue a merger or acquisition, Ms. Barra might be well advised to maintain a very low profile …
… especially on Sadie Hawkins Day.