Why is it that most mergers don't work? Depending on which study you read, it is estimated that anywhere from 50-80% of mergers and acquisitions do not deliver the results that companies expect. Reasons for these failures range from cultural mismatches to a lack of post-merger integration of strategies and operations.
One recent merger that may make sense financially is SBC's acquisition of AT&T. Last week, the Wall Street Journal reported that the combined company will rename itself AT&T and focus its strategy on selling bundled video, data, wireless, and phone services over a single network. The company is also going to offer a new form of television with 1,000+ channels and targeted advertising (similar to what Google provides on the internet). This is something that the companies could not have achieved effectively before the merger, and it is a good example of a merged company leveraging its combined strengths and assets to deliver a more ambitious and aggressive business strategy.
Obviously, it is still to be seen whether or not this strategy will work and whether or not this will be enough to reverse AT&T's recent misfortunes. The company estimates that only 23% of its revenue will come from its traditional land-line phone business, so in a sense, this combination and strategy may be more of a game of survival than strategic brilliance. However, it is a good example of what companies often fail to do during their merger integrations: combine business operations, including operational and technical infrastructures, to achieve synergies and economies of scale.
Hopefully they will also get some of the other merger integration critical success factors right along the way, such as integrating corporate cultures, optimizing and streamlining business processes to reduce costs and overlap, and developing an organizational design that more effectively leverages the strengths of the people of the two companies. If they can get most of these things right, chances are that SBC and AT&T shareholders will be better off than before the merger.