A failure innovation strategy of acquisition during excess capacity: financial approach based on case study at the state-owned cement holding PT Semen Indonesia (Persero) Tbk

Abstract

This research aims to prove that wide gap between theories and practices in terms of acquisition that should be positive to drive performance of the acquirer but the distinctive things happened in Indonesia was not according to the preliminary design planned. The failure acquisition of Semen Indonesia (SMGR) over Holcim Indonesia (SMCB) in 2018 due to what had been done during excessive capacity should be priority to strengthen interns than acting to intervene outside. This study elaborates a case study, mixed-type research, and presents by explanatory design. It comes to find that acquisition during excess capacity is a failure step taken by PT Semen Indonesia (Persero) Tbk. Many corporate steps are taken to a polish performance of the SMCB-acquiree but so far failing and endangering the whole performance. To compensate and withhold the climb-down due to oversupply, the management engineering of market intervention had been done. Big portions of market’s regions previously belong to SMGR had been handed over to SMCB to help increase its performance. The forced switching to polishing SBI’s performance is hurting all of the holding’s members. SBI enjoys improving market but at the same time endangers the performance of the whole groups of holdings. This research contributes to updating the present development of recent corporate actions of popular merger and acquisition are both previously labeled as the best corporate strategy for decades.

Managing Complex Investment Procedures

“…Therefore, demand-supply and input-output relationships are fundamental considerations for obtaining support decisions. According to Subiyanto (2020), this corporate strategy began with a feasibility study to convince the board of directors (BOD) before the plan was presented to the public extraordinary shareholder meeting (ESM).…”

“…The stage determines whether the project is to "go" or "no-go." Evaluating political, economic, social, technological, environmental, and legal (PESTEL) is mandatory without exception (Subiyanto, 2020;Bosch-Sijtsema & Gluch, 2021;Thonemann et al, 2022). The decision on the project proposalbased on inadequate preparationcould be an improper project or insufficient preliminary site investigation, and the consequence would be a "no-go" (Akinradewo et al, 2020;Abuezhayeh et al, 2021).…”

“…As part of public companies, the major challenge is strictly adhering to national and international laws (Wondimu et al, 2020). Failure to educate the ECI on engagement has led to many process disruptions, especially in large projects or megaprojects (Kumaraswamy et al, 2017;Subiyanto, 2020).…”

Mergers and acquisitions: does performance depend on managerial ability?

“…The synergistic effect of M&A actions has also not been able to increase the value of the company and its shareholders. In a case study of M&A in the cement industry in Indonesia, the acquisition of state-owned cement holding Semen Indonesia over Holcim Indonesia in 2018 indicated that acquisition during excess capacity is a failure step taken by Semen Indonesia (Subiyanto, 2020 ).…”