Companies need money to keep running. This money often comes from investors who put their money into shares or buy up the companies completely. This does not always end well for the companies. Two examples:

heinzHeinz employees at play with two multi-millionaires

Heinz is known for its tomato ketchup. It has branches in various countries. The management of the company is planning to close a branch in Turnhout (Belgium). This will put 200 people in Turnhout out of work.

It all started when Heinz was bought in February 2013 for 23 billion dollars by two investment companies, Berkshire Hathaway (led by the multimillionaire Warren Buffett) and 3G Capital (led by the multimillionaire Jorge Paulo Lemann). To pay the $23 billion, these companies borrowed a lot of money. They have to pay that money back quickly. They want to pay for it by making Heinz more profitable.

And to achieve this, Heinz's management was instructed to make drastic cost cuts: fewer branches and fewer staff. That is why the Heinz outlet in Turnhout had to close. The staff that were allowed to stay had to face cuts. The small fridges for storing food and drinks had to go. After all, they use electricity. Office workers were instructed to make no more than 200 photocopies a month in future, to keep costs down.

To an article in De Wereld Morgen, 28 February 2014

 

How Apax said goodbye to PCM

pcmIn May 2004, investment company Apax bought nearly half the shares of PCM, a publisher of books and newspapers like De Volkskrant and Trouw. With this purchase, Apax became the new boss of PCM. At that time, the publishing company had an equity of 268 million euros and a debt of 177 million. When the other shareholders bought back the shares from Apax in 2007, the equity of PCM was only 56 million euros and the debt had increased significantly to 367 million. Apax had drained PCM of its assets in a few years and left the company in a sorry state.

To an article in NRC-Handelsblad of 28 March 2007, supplemented by the Wikipediapage on de Persgroep Nederland.


Questions
5) In the article from De Wereld Morgen, two Belgian MPs claimed that the Heinz plant in Turnhout could have stayed open if labour costs had been cut back. What do you think of this statement?
6) The economist Van der Zwan called the way Apax managed publishing house PCM "playing with a company." What did he mean by that?
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