John Gapper Resources are easier to buy than people

The summer flurry of mergers and acquisitions now includes a couple of big hostile bids – those by BHP Billiton for PotashCorp of Canada, and by South Korea’s national oil company KNOC for Dana Petroleum of the UK.

Given the patchy record of mergers and acquisitions generally, and the reluctance of many companies to go hostile for fear of upsetting the target company and undermining its value, it raises the question of whether these bids are worthwhile.

Actually, I think they may be, because energy and resource industry bids are significantly different from knowledge industry mergers such as the now-notorious AOL/Time Warner deal in 2000, which led to an factional battle within the merged company.

In these cases, BHP and KNOC are seeking resources rather than companies, and oil fields and fertiliser chemicals do not cause trouble the same way that people often do following mergers.

The cultural dangers in resources deals are smaller than in financial services or technology and media deals. Not all hostile bids upset the target.