The M&A Dating Game VI: These Countries with a Population that can Fit in a Football Stadium
This is the sixth article in a series about countries that have not had an announced M&A event in the past 20 years. So, here are some M&A opportunities.
28 October 2014
This is the sixth article in a series about countries that have not had an announced M&A event in the past 20 years. In my opinion, there’s so much that these countries have to offer that it’s a shame that they’re being left out. Therefore, I have decided to take it upon myself to drum up some business for them.
Last time I left you with these hints:
- I will write about a few countries at once — all are located in the Pacific Ocean.
- You can make an anagram from these countries, that reads as follows: “American awful unvaliant usual as a tumour islands.”
For those who aren’t as skilled in solving anagrams as the rest of us, the solution is:
- American Samoa
- Wallis/Futuna Islands
If you think these islands look like they are in the middle of nowhere, you’d be right. Getting to Wallis and Futuna Islands (the closest of these islands to Australia) from Brisbane is a 24 hours plus ride in total, including two stopovers clocking in at over 21 hours.
Just so you get a better idea of the type of places you’d be dealing with if you’re looking for an M&A opportunity, here are some of the local facts to get you started:
- The total population of all four countries is 90,348. To give you an idea of scale, all of these people can sit in Michigan Stadium, and there would still be 19,553 empty seats.
- The total GDP (PPP) for these countries is just about $735 million — slightly less than Micronesia’s, but more than the Northern Mariana Islands. If that doesn’t help you with scale, here’s more context: If all of these islands together were a company, they still wouldn’t make the Fortune 1000 list (Magellan Midstream Partners is number 1,000 on that list and has revenues roughly 2.5 times the GDP of these countries).
- The total size of these countries is about 150 square miles, which is only slightly larger than Philadelphia, Pennsylvania (we’re talking about a difference of less than 10 square miles).
- And the last fun fact (really, more along the lines of Jeopardy trivia), is that Wallis and Futuna was the only French overseas territory to side with Vichy France during WWII. Because they had a stake in the results and all …
Bullish. Healthy. Growing. These are all words that describe the opposite of the state of the economy for these islands. Being very small and in the middle of nowhere certainly has its disadvantages — limited arable land, lack of mineral deposits, difficult transportation … the list goes on. That being said, I do see some M&A opportunities that can set you on a path to success and an awesome retirement.
Opportunities for M&A
I have come up with a comprehensive M&A plan that incorporates all of these islands and allows you to retire in style. Behold:
- Step 1: American Samoa has one or two tuna canneries (believe it or not, there are conflicting reports). These canneries account for 80 percent of employment (and most of the canneries' products are exported to the U.S.). You could buy one or both. Then you could export the canned tuna to the U.S. and let the money roll in.
- Step 2: Nauru is totally dependent on foreign aid and food imports. However, it is also the only country out of this bunch with mineral reserves — specifically phosphate. The primary reserves are depleted, but secondary reserves are predicted to last for approximately 30 more years. You could buy the mineral rights using your returns from the tuna canneries in American Samoa. Then, in 30 years, you could turn the mine into an amusement park, hotel, or tourist attraction — you name it. Just turn it into passive income.
- Step 3: Tuvalu has no known natural resources. It is also entirely dependent on foreign aid and imports, and gets less than 1,000 tourists per year. What Tuvalua does have, though, is the rights to the “.tv” Internet domain name. Last time Tuvalu leased out this domain name, it made $50 million in royalties over 12 years. My advice? Wash, rinse, repeat; extend the contract. Tuvalu even has a national trust fund worth $77 million. I’m sure the government would give you a financing deal on this, given all of the benefits you will bring to the island.
- Step 4: Now that you own a tuna cannery, phosphate mine, and technology empire, it’s time for you to retire to here:
Yes, that’s Wallis and Futuna.
They literally have nothing to offer. We’re talking a subsistence agriculture-based economy, heavily dependent on foreign aid and remittances. With a GDP of only $60 million, just buy it outright and turn it into your own private resort. Use the passive income from your other investments to finance a lifestyle of frolicking in the sun and sand.
Now, for the next edition’s hint:
We’re going way up north. Like Arctic Circle north. So north that even the Vikings have called this place “cold shores.” See you next time!
Ronen is a Senior Associate in Strategy and Product Marketing at Intralinks where he helps shape the direction and marketing of Intralinks Dealspace and DealNexus for the M&A community. Prior to joining Intralinks, Ronen was a management and strategy consultant for several years. Ronen has also worked in the financial sector, specifically in the venture capital and private equity fields. He graduated from New York University’s Stern School of Business with a dual degree in Economics and International Business, with a specialization in Entrepreneurship.