Competition is for Losers

Tuesday, June 23, 2015 Francisco Carneiro 0 Comments

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Best business is to buy your competitor, it's cheaper than to destroy it. In this complicated world more and more competitors figured out that they have to combine. And with Chep money the best use is to borrow and pay whatever for your competitor!

From Reuters-
Patrick Drahi, the owner of France's number two telecoms player Numericable-SFR (NUME.PA), has offered to buy smaller rival Bouygues Telecom (BOUY.PA) for about 10 billion euros ($11.4 billion) in cash, two people familiar with the matter said.

The move, which was first reported by the Journal de Dimanche, would take the French mobile market from four to three players at a time when the merits of such consolidation are being hotly debated in Europe.

From Reuters-

Mexico's Bimbo, among the world's largest bread makers, said on Monday it had reached a preliminary deal to buy Spain and Portugal-based Panrico, excluding certain brands.
Bimbo said in a statement that the deal was subject to the approval of antitrust regulators and it did not provide any details on the amount of the purchase. (Reporting by Michael O'Boyle)

Number one, cash is king... number two, communicate... number three, buy or bury the competition.

Jack Welch

From Peter Thiel,

Competition Is for Losers

If you want to create and capture lasting value, look to build a monopoly, writes Peter Thiel

This means that even very big businesses can be bad businesses. For example, U.S. airline companies serve millions of passengers and create hundreds of billions of dollars of value each year. But in 2012, when the average airfare each way was $178, the airlines made only 37 cents per passenger trip. Compare them to Google, which creates less value but captures far more. Google brought in $50 billion in 2012 (versus $160 billion for the airlines), but it kept 21% of those revenues as profits—more than 100 times the airline industry's profit margin that year. Google makes so much money that it is now worth three times more than every U.S. airline combined.
The airlines compete with each other, but Google stands alone. Economists use two simplified models to explain the difference: perfect competition and monopoly.

http://www.wsj.com/articles/peter-thiel-competition-is-for-losers-1410535536