Page 156 - Accelerating out of the Great Recession

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company gained a significant economy of scale in reporting and
advertising. Between 1970 and 1980, Gannett’s earnings before
interest and taxes (EBIT) margin grew from 16 percent to 25
percent, and in 1980, it had the highest EBIT margin among
its three major national competitors.
P&G and IBM successfully conducted M&A during the Great
Depression to quickly diversify their product portfolios through
the purchase of companies that had complementary brands and
technologies. To expand its leadership in the U.S. soap market,
P&G acquired 12 brands during the 1920s and was preparing to
purchase others when the Depression struck. Rather than aban-
don its expansion plans, P&G went ahead with the acquisition of
James S. Kirk & Co. in June 1930. The same year, it entered the
U.K. and French soap markets with the acquisition of, respectively,
Fairy and Monsavon. Its fourth soap-brand acquisition of the era
occurred in 1937 with the purchase of Monogen in Japan.
Counting its own brands as well as those it acquired, P&G intro-
duced more successful products during the 1930s than it had dur-
ing the previous decade or would in the subsequent one.
DuPont followed a less common strategy of opportunistic
M&A. In 1930, with many suppliers failing, the company was
threatened with a shortage of raw materials. It just so hap-
pened that one of the suppliers facing bankruptcy was Roessler
& Hasslacher Chemical. DuPont made a quick move to
acquire Roessler & Hasslacher—an acquisition that helped
DuPont not only to secure the crucial inputs it needed for its
own products but also to gain entry into the electrochemical
market through a range of specialized chemicals that eventu-
ally were used in electroplating, refrigeration, bleaching, disin-
fectants, and insecticides.

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