Dealing with an M&A rumor is tricky terrain for a CEO. When you’ve got to do it in the middle of a big industry event, well, that’s a high-wire act for sure.
Just ask Verizon CEO Lowell McAdam, who arrived at a Citibank investment conference a day after a Bloomberg news report said he was in talks to buy AOL. But his denial just might keep the rumors alive.
The Bloomberg report said Verizon was “exploring a potential acquisition or joint venture,” according to unnamed sources (of course). Verizon CEO Lowell McAdam offered an interesting response, telling conference attendees that his company is not in “significant acquisition discussions” with AOL.
McAdam was trying to downplay the rumor but his use of the word “significant” suggests there’s substance to the speculation. The market seems to view it that way too, with AOL shares up more than 3 percent Tuesday.
So what’s a CEO to do at a time when merger activity is at record levels and rumors are easily started? It sounds quaint, but the best approach s the one many CEOs have used successfully, even in equally frenzied times: Never respond to speculation.
Ironically, Mr. McAdam was on the right track when you read his entire comment (below). He went a little too far with his last line, and it turned out to be the most newsworthy:
“If I had a dollar for every company we are supposed to buy, I’d be in good shape financially,” he said. “We will be more of a partner with media companies rather than doing an acquisition. AOL along with lots of other media companies are potential partners for us. But to say we are having significant acquisition discussions is really inaccurate.”
The interesting question now is whether Verizon will need to make a public statement if it becomes involved in “significant” acquisition discussions with AOL at some point in the future. Knowing when that line is crossed is certainly going to keep Verizon’s lawyers busy.