Albany International/Geschmay Group Merger
22 Pages Posted: 21 Oct 2008
Abstract
Albany International, a New-York-based paper machine clothing (PMC) manufacturer, has overpaid to acquire Geschmay Group. Its paper manufacturer customers have been consolidating quickly, forcing PMC companies to do the same. Not only are the corporate and national cultures of the two firms different, but Geschmay is multicultural and poorly integrated. Albany International management must decide which plant to close in France, where the merger resulted in redundant facilities; meanwhile, French law and French culture makes it nearly impossible to move people between plants.
Excerpt
UVA-BP-0428
Rev. Jan. 7, 2013
ALBANY INTERNATIONAL/GESCHMAY GROUP MERGER
The winter of 2000 was a very tense time for Albany's French operations.
—Jean Senellart of Albany International
It was December 16, 1999, four months after Albany International's acquisition of the Geschmay Group, when Chairman and CEO Frank McKone and Senior Vice President in charge of Europe Bill McCarthy reviewed the capacity analysis of the new company's European facilities. Albany International, world leader in manufacturing paper-machine clothing, faced overcapacity in Europe, negative stock-market reaction to the dilutive merger, a pressing need to generate the promised synergies, and limited investment capital. Now, the three executives had a tough decision to make: as part of an earlier 1998 cost-reduction program, Albany International had determined it might be necessary to close the company's plant in Riberac, France. The Geschmay acquisition, however, presented an alternative. In either case, the decision was wrenching because Albany International executives were proud of its culture of long-term employment and stable operating environment.
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Keywords: Mergers and acquisitions, acquisitions, corporate strategy, industry evolution, strategy implementation
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