Communication that shifts power

Communication that shifts power

TANKER

MERGER
04.01.2007

When two of Norway’s most well-reputed companies merge, it’s surprising that none of the company names is good enough for the new organisation. It follows that the arguments for re-christening the child are less than convincing.

The Hydro and Statoil administrations claim that a new name is needed in order to create something new, and to look to the future. Hydro-employees claim that this is a merger between equal partners. Consequently, the Statoil-name cannot be used. These statements are complete oil-fairytales from the Hydro and Statoil communications departments. Anybody who has participated in merging processes knows that it’s not a question of creating something completely new. Two company cultures are to be merged. In this case, two very different cultures. While the Hydro-culture is 101 years old and is tightly and soberly governed, Statoil is a young company operated from below. When the Hydro-man Torvund gets responsibility for exploration and production in the merged company, Statoil-people raise a hue and cry. They fear detailed control, they say. When Statoil suffered its Irangate, scornful comments poured from Hydro-people. – This could never have happened in our company, it was claimed. To believe that antagonism like this will disappear with a new name, is naiv.

The Hydro administration’s pipe dream about a merger between equal partners also lacks basis in reality. The Hydro shareholders get 32.7% of the shares in the new company, the Statoil shareholders 67.3%. The merged company will have 31,000 employees. Only 5,000 come from Hydro’s oil- and gas division. Helge Lund from Statoil is appointed new group chief executive. In the new board of directors, 4 members come from Statoil, 3 from Hydro and 3 from the employees. The corporate management consists of 6 Statoil-managers and 3 from Hydro. The company’s business address will be Stavanger. We haven’t seen such equality since the South-African apartheid regime. Mixing oil and water is no easy task.

The reality is that Statoil is eating Hydro’s oil- and gas division. Statoil’s rules will govern. Statoil has a well-established name in the international world of oil. It is costly and unnecessary to scrap it. A new name does little for reconciling the two old rivals. A successful merger presupposes the art of leadership, not the art of illusionism.

Hans Geelmuyden