I just stumbled across an intriguing (and concerning) example of diversification by one of Australia’s bigger retailers.
The typical rationale for acquisitions are some sort of shared competencies, value chain activities and the like. You wouldn’t typically view ‘being a store’ as adequate similarity, especially when one business prepares and sells a small range of perishable goods and the other manages a extensive range of hardgoods.
The Dymocks CEO (see this week’s BRW for an interview) claims they will leverage their skill sets in franchising, but you really would hope for a whole lot more. The only clever thing they seem to have done is keep the Healthy Habits founder involved (with the remaining 20% stake).
Watch for the carnage….