Synergy might be the biggest buzz word in the corporate world, but we bet TPG and Vodafone are loving it.
TPG used to be a standalone Aussie telecom provider worth around $4.5 billion. And with nearly 2 million broadband subscribers, it was the second-largest provider in the country.
Back in 2020, TPG merged with telco Vodafone, which took its market cap to a UGE $8.9 billion. Vodafone got access to TPG's super-speedy network, and TPG got to ride on Vodafone's mobile coattail. Awww isn't that sweet.
The TPG + Vodafone team posted a 8% profit decline...but interestingly, they managed to save $38 million in 'synergies' as a direct result of the merger. That's gotta feel good.
Cost synergies are when companies save cash because of increased efficiencies after a merger.
If company X merges with company Y, and each have a 100-person strong sales team, you probably won't keep it that way. Say each team member costs $60k, laying off 100 team members is $600k in cost synergies right there.
Cost synergies aren't always about redundancies. They can be things like insurances, equipment or even a physical location. In VodaG's case (their couple name that we made up), it could be about the type of infrastructure or tech that one has, and the other needs.
Sign up for Flux and join 100,000 members of the Flux family
