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Article • 27/02/2024

M&As and Antitrust Regulation: Safeguarding Corporate Reputation with Strategic Communication

In the past year, regulatory pressures have intensified around recent mergers & acquisitions (M&As). This leaves companies facing a double onslaught – both financial setbacks and the harsh glare of negative media scrutiny. 

In 2023, European and U.K. antitrust regulators stood in opposition to several significant M&A deals. This resonated in the news cycle throughout the year with persistent turmoil. The trend not only thwarted high-profile deals but led to the ballooning value of unrealized transactions on both sides of the Atlantic. 

In the aftermath of failed M&A attempts, effective communication emerges as a strategic imperative. Strategic comms require a nuanced approach that considers stakeholder impact and heightened scrutiny from regulators and the media alike.

3 Cases of Recent M&As and Antitrust Challenges

Amazon x iRobot $1.35b Acquisition Hits Regulatory Opposition

The most recent casualty in this regulatory battleground is Amazon’s ambitious plan to acquire robot vacuum manufacturer iRobot. The deal valuation reached approximately $1.35 billion.

In early February, Amazon officially pulled the plug on the iRobot deal, citing “undue and disproportionate regulatory hurdles.” The transaction faced scrutiny from both U.S. and EU antitrust regulators. The European Commission took a particularly forceful stance.

Media Reports Coverage on Amazon and iRobot

While Amazon’s case is the latest example of regulatory roadblocks getting in the way of M&A deals, it is not the only one. Several other major tech acquisitions encountered similar challenges, leading to a slowdown in M&A activity near the end of 2023.

Adobe and Figma’s $20B Acquisition Abandoned Amid Regulatory Scrutiny

In December, Adobe abandoned its $20 billion acquisition of design software provider Figma. According to Adobe, there was “no clear path to receive necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority.”

Media reports on Amazon and iRobot

Adobe’s chair and CEO, Shantanu Narayen, expressed the company’s disagreement with the recent regulatory findings. He noted that despite their shared vision to redefine the future of creativity and productivity, both companies deemed it in their best interests to move forward independently.
Regulators took issue with Adobe’s near-monopoly in the design software market. They raised concerns about potential harm to innovation if Figma, a rapidly growing product design platform, were to be absorbed by Adobe.

Meta’s $400M Giphy Deal Faces Backlash and Opens Door for Shutterstock

Meta’s $400 million acquisition of Giphy encountered challenges from British regulators. Regulators flagged concerns about potential competition issues in social media and display advertising.

In 2021, the CMA directed Meta to unravel the deal, prompting Meta to sell Giphy to Shutterstock for $53 million in 2023. 

Shutterstock’s acquisition of Giphy was perceived as a bargain and earned overwhelmingly positive coverage. However, Meta did not escape negative media scrutiny.

Media reports on the acquisition of Giphy by Shutterstock

How does media coverage of M&A transactions shape a company’s public image?

The media fallout from a failed M&A is asymmetric, distinctly favoring the acquiring entities over their targets:

  • In 2023, Amazon’s attempt to acquire iRobot constituted less than 1% of news coverage about Amazon, yet it accounted for 16% of the news coverage about iRobot. 
  • Adobe’s failed merger attempt with Figma comprised 4% of news articles about Adobe, and yet over one-third of Figma’s overall coverage.

Likewise, while failed M&As inevitably correlate with heightened negative media coverage, the repercussions of such negativity disproportionately impact the target of the M&A. 

As larger acquiring companies earn a wider stream of media attention, it seems to dilute the negative coverage they attract:

  • Amazon weathered less than 1% of negative coverage related to the iRobot episode, while Adobe saw its Figma acquisition problems comprising 9% of its total coverage.
  • In stark contrast, iRobot and Figma experienced a more pronounced impact, with negative coverage related to M&As accounting for 27% and 62% of their overall negative coverage, respectively. 

How Strategic Communications Can Help

Overall, antitrust regulator claims and failed M&As can inflict damage on a company’s corporate reputation, carrying consequences such as forced breakups, blocked transactions, and substantial monetary penalties. 

In the face of such challenges, there is no quick fix, but companies can employ effective, timely, and sustained communications to counter damaging allegations and mitigate concerns.

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