It’s game on for the PR industry as the boom in transcontinental mega-mergers smashes together companies in industries from beer to mobile phones and cement to pharmaceuticals. With the global economy looking sluggish, buying your way to sales growth by snapping up a competitor is the fastest route to boosting revenues.

But the path to an international merger can be rocky and dangerous. Every merger needs an army of communicators, PR agents and public affairs experts to get the right messages out to all concerned.
A proposed deal first has to get past the pack of competition watchdogs – some fierce, some obedient – that act as gatekeepers to the world’s markets. From Anheuser-Busch Inbev pouring £79bn into buying SABMiller to create the world’s biggest brewer, to Three’s failed attempt to buy rival O2 – blocked by the EU antitrust watchdog – competition regulators spend months scrutinising mergers to examine their impact on markets.

During those months, much may happen to undermine the deal. Exchange rates can fluctuate wildly
requiring a rebid, bosses may leave, a counter bid may emerge. A remedy to assuage concerns about monopoly power in a market – such as selling off brands – may be rejected by a regulator, requiring a new remedy.

Every twist and turn of the unfolding story of a merger needs a deft communications touch that balances out the competing needs of shareholders, staff and regulators. That could mean keeping all stakeholders informed about the moves – or carefully restricting information to a privileged few.

The more the global economy stagnates, the bigger the merger deals get, and the longer and more complex the antitrust investigations become. PR agencies are tooling up for the battles ahead, hiring public policy experts to advise clients on getting their deals past regulators. For instance, FTI Consulting has hired former director general of competition at the European Commission, Sir Philip Low, as a public affairs adviser at its strategic communications unit working in London and Brussels.

As soon as a regulator gets involved in a merger, the communications task changes. A deal may begin as a PR battle fought through the media to persuade shareholders of its commercial logic. This requires clever crafting of the story and the ability to communicate with shareholders, business editors and comment writers. But as one PR source says, “When you bring in a regulator, there is a whole new area of activity because you are talking to a different type of person, to regulators be they UK, U.S. or European. And the nature of that communication changes. It is rare, in my experience, that regulators are influenced by
what they read in the papers. You have public policy experts working alongside PR guys to try and
persuade, influence and inform the regulators. It’s partly a process to make sure the regulators have the information you think they require to arrive at the right decision.”

“The preparation is absolutely critical, you cannot expect to wander into a transaction, particularly a multi- jurisdictional, very large transaction, and simply hope that things will go your way”

Anheuser-Busch Inbev’s purchase of SABMiller gives it one third of beer sales worldwide and nearly half of all global beer profits. No small beer, and no surprise that the deal has needed approval from a string of antitrust regulators in China, Africa, the U.S. and Europe. This has slowed down the process, which has stretched on for over a year. In that time, a slump in the value of the pound has forced AB Inbev to increase its offer.

Concrete and crushed rock manufacturer Lafarge’s €41bn (£35.4bn) merger with Holcim announced in 2014 sparked antitrust concerns in 15 markets from Canada to Morocco. The combined group sold off nearly $7bn (£5.4bn) of assets to get the deal past the competition watchdogs. Bayer’s proposed $66bn (£50.8bn) merger with Monsanto will attract the attention of competition authorities and Bayer has agreed to pay its proposed partner $2bn (£1.5bn) if the antitrust authorities knock the deal back.

When the stakes are this high, strategy needs to be flawless. The first step in any mega-merger is for commercial lawyers to assess its impact on competition and to predict what the regulators reaction. If the deal leads to monopoly positions in certain markets, that means outlining possible remedies, such as selling off certain brands. For the AB Inbev takeover of SABMiller, the company offered European regulators a good will ‘gift’ of selling off SABMiller’s brands in Europe.

Clear communications are at the heart of any strategy. “The preparation is absolutely critical, you cannot expect to wander into a transaction, particularly a multi-jurisdictional, very large transaction, and simply hope that things will go your way,” says Ed Bridges, a senior managing director at FTI Consulting.

Companies have become sophisticated at the mergers game, he says. Their heads of strategy will work through what is required at an early stage, and a PR firm will get involved. “They’ll have their internal communications and public affairs teams working on the problem for months if not years beforehand in order to assess and map out where the remedies might come and to work out the ask of the regulator and the offer of the bidding party to the regulator as a sort of pro-active gift,” Bridges says.

Before a bid is made, utmost secrecy is required from the team hatching the deal. But when the time is right to start releasing details of the plan, there is a huge challenge in reveleaing that information. The bid team has detailed knowledge of the bid process, the regulatory challenges, the possible remedies and the precise strategy for bringing the deal about. In the case of huge businesses like AB Inbev and SABMiller, or the
recent mega-mergers between mining companies, transferring knowledge from a small group to the
whole organisation is challenging. The insight of a small team with a deep understanding of the issues must be turned into a stakeholder communications plan that can be enacted simultaneously across the globe. Everyone working in the companies affected needs to be given the same information at the same time.

There is nothing more destabilising than staff learning via informal networks such as social media, friends or the press that their part of the business is going to be sold off. A democratic flow of information is crucial. Bridges says, “Part of that is ensuring that whatever the message, it is easy to understand and is compelling in its ability to be communicated. And also ensuring that the various parties involved in a transaction,
both internal and external advisers and internal staff, are given the right toolkit to go off and do that. In due course, you have seen those strategies have been effective with AB Inbev and SABMiller. And in other very large transactions in pharmaceuticals, bioscience and telecoms, you will see those kinds of programmes being rolled out.”

A mega-merger also requires ‘stakeholder mapping’ to understand where the influence lies within a regulatory system. Companies need to determine who is influencing the decision makers and what style of information the acquiring company should provide. In some jurisdictions, proactive lobbying can be viewed negatively. But, in the U.S., open lobbying in public affairs is expected.

Businesses can misjudge the mood of antitrust regulators and what they will be prepared to accept. A recent spectacular failure was mobile operator Three’s aborted £10.5bn purchase of rival O2. The deal was blocked by European commissioner for competition Margrethe Vestager. In May, her team concluded that the purchase would be bad for competition in the UK mobile market, reducing the number of major players from four to three. But Three’s owner, the Hong Kong based CK Hutchison, is not taking this lying down and is reported to be appealing against the decision through the European Court of Justice.

Some argue that a golden rule of mergers is to keep competition regulators onside and avoid antagonising them. Hutchison declined to comment about this, but one source says, “There is no point in kicking off a major merger with an antagonistic attitude to any of the major competition regulators, you’ve got to have a very good idea about what they will ask for and how that will affect the economics of the transaction.”

How Hutchison misjudged the mood of the regulator is interesting. The takeover of O2 had been in the offing since 2013 when the European Commission competition commissioner was Joaquin Almunia. He had a reputation for settling deals and remedies behind closed doors. He was replaced in 2014 by Margrethe Vestager who has proved much more proactive in her investigations. Part of the preparation for a merger is to “know thy regulator” and what type of deals they are likely to let through. But companies can be blindsided if the regulator changes halfway through the process.

Regulators conduct most of their conversations with companies behind closed doors. Secrecy is of the utmost importance as the lawyers need to have their wiggle room in negotiations. While these are taking place, there is usually a communications lockdown. Legal advisers recommend remedies for competition concerns when the regulator asks the company to state its case. They will often invite competitors to give their views – these will probably be negative because their objective will be to undermine the proposed business model.

One observer says, “What you can’t do is to have this out in public because the antitrust
authorities wouldn’t find it amusing if a company says publicly to shareholders, ‘Yeah we don’t have any problems, we don’t have any concerns.’ If one of these regulator guys sees that, they’ll think right, we’ll give them something to be concerned about.” They continue, “In these cases, companies don’t do any propaganda, they don’t do road shows, or any industrial relations. They accept that there are some markets with antitrust concerns and work with the antitrust authorities to solve this, so they wouldn’t actually make a statement publicly by saying we are going to offer remedies of that kind and solve the case because antitrust authorities wouldn’t find that very amusing or very helpful and you would probably get even more resistance than before.”

Inside intelligence, contacts and experience are the key tools for communicators involved in mega-mergers. Knowing all about the regulators, how they can be influenced and their record in approving mergers is vital. Hiring a PR firm with a strong public affairs team can boost communications in the event of an investigation. But in the case of cross-border mergers, a long haul and lobbying that stretches from Beijing to Brussels and Pretoria to Washington may be in store. The wait may be worth it in the end though it may take months or even years to achieve. But, there are plenty of communications experts on hand to advise businesses on how to make it through the long, tortuous journey to completing a merger.