Holdings as an example of pro-forma attitude to enterprises’ mergers

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April 22, 2016 18:21

Belarusian enterprises are actively merging into holdings. However, as a rule, these processes are not based on a business plan or aiming to achieve the maximum effect, rather they are declarative by nature and meant to fulfill authorities’ administrative tasks.

On November 8th, 2012 a meeting about the merger of the country’s diary processing enterprises was held.

In 2012, ‘holding business model’ started forming in Belarus. A number of holdings in various industries have been created. New enterprises joined the newly created holdings. In August 2012, there were 45 holdings in Belarus, which included 297 companies. Before the end of 2012, 16 more holdings are planned to be created in various industries. In addition, there are international merger projects, in particular, “Rosbelavto” holding.

The meeting demonstrated that mergers are often rooted in the local authorities’ desire to fulfill administrative orders pro-forma. Merger projects’ economy is not being calculated: there are no business plans; efficient enterprises are merged with ineffective, thus putting off distressed companies to those which have proven their efficiency with financial results.

One of the problems with holdings’ creation is de-facto repetition of the five-year plans practices in holdings. Enterprises, from being mobile structures, capable of quick response to market changes, become colossal structures with bureaucratized administrative core, often acting not because of the economic feasibility, but following orders and plans developed by the authorities. 

Thus, the state, by artificially enlarging its assets into holdings, loses the basic economic sense for the mergers, i.e. the enterprises’ efficiency. Businesses merge in holdings, not because it creates a synergy effect and boosts development of companies inside a holding, but solely for the formal consolidation purpose and the potential subsequent sale as one. It would be a lot more effective to allow businesses to decide when and how to merge, and on what principles.

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Minsk is attempting to lay out a mosaic from various international religious, political and sportive events to shape a positive image of Belarus for promoting the Helsinki 2.0 idea.

Belarus’ invitation to the head of the Holy See for a meeting with the Patriarch of the Russian Orthodox Church should be regarded as a continuation of her foreign policy efforts in shaping Minsk’s peacekeeping image and enhancing Belarus’ international weight. The Belarusian authorities are aware that their initiative is unlikely to find supporters among the leadership of the Russian Orthodox Church in Moscow. In Russia, isolationist sentiments prevail.

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