5 Largest Historical Mergers and Acquisitions
In business, there are always going to be companies that merge or get acquired by other companies. It’s a part of the industry. However, there are some mergers and acquisitions that are so large, they make history. The history of business is littered with failed mergers and acquisitions. In fact, studies have shown that most mergers and acquisitions fail to create value for shareholders. However, there are a handful of large mergers and acquisitions that have been successful in creating value for shareholders.
Here, we will take a look at the 5 Largest Historical Mergers and Acquisitions in terms of total value. We will also examine why these deals were successful in creating shareholder value.
1. Vodafone and Mannesmann (1999) – $202.8B
In 1999, Vodafone Group plc (VOD) acquired German conglomerate Mannesmann AG in a stock-for-stock deal valued at $202.8 billion. The deal created the world’s largest mobile phone company with more than 186 million customers. The acquisition was completed following a hostile takeover battle that lasted nearly five months.
Vodafone initially made a $154 billion offer for Mannesmann in November 1999, which was rejected by the German company’s board of directors. Vodafone then sweetened its offer to $183 billion, which was again rejected. In January 2000, Vodafone made a final offer of $202.8 billion, which Mannesmann’s board finally accepted.
The deal was completed in February 2000, making Vodafone the world’s largest mobile phone company. The acquisition gave Vodafone access to Mannesmann’s extensive mobile phone network in Europe and also increased its customer base significantly. The deal also made Vodafone the world’s largest provider of digital wireless services.
2. AOL and Time Warner (2000) – $182B
In January 2000, AOL and Time Warner announced their merger, which was valued at $182 billion. The deal combined AOL’s Internet service with Time Warner’s content and cable TV networks. The merger was seen as a way to create a new media powerhouse that could take advantage of the growing popularity of the Internet. However, the marriage between AOL and Time Warner was not a happy one.
The two companies had very different cultures and philosophies, and they struggled to find common ground. In addition, the dot-com bubble burst in 2001, causing the value of many tech stocks to plummet. As a result, AOL Time Warner stock lost more than half its value over the next few years. The company eventually renamed itself back to Time Warner in 2009 and spun off AOL as an independent company once again.
3. Google and Motorola (2012)
In 2012, Google Inc. completed its largest ever acquisition when it bought Motorola Mobility from Motorola Inc. for $12.5 billion. The deal gave Google a portfolio of over 17,000 patents and the ability to produce its own line of smartphones and tablets. The acquisition was largely seen as a defensive move on Google’s part, as it came just months after another major player in the smartphone market, Apple Inc., had bought Nortel’s patent portfolio for $4.5 billion.
By acquiring Motorola, Google gained access to patents that would help it defend against any future intellectual property lawsuits. The deal was not without its challenges, however, as Motorola proved to be a struggling business. In 2014, less than two years after the acquisition, Google sold off most of Motorola to Lenovo for $2.91 billion. The move comes as a surprise as Google had been widely tipped to buy HTC or LG instead.
However, with Motorola, Google gets a company with a strong portfolio of patents which will help it defend against lawsuits from the likes of Apple and Microsoft. Motorola also brings with it the highly popular Moto G and Moto X smartphones. The deal is likely to be seen as a positive by Android fans as it will give Google greater control over the platform.
4. eBay and Skype
In 2011 marked the largest Internet merger in history. eBay Inc., a global online marketplace for the sale of goods and services, announced it would acquire Skype Technologies S.A. for $2.6 billion dollars. The deal was an all-cash transaction financed through a combination of cash on hand and debt financing.
This acquisition allowed eBay to enter the rapidly growing market for Internet voice communications and video conferencing while also expanding its customer base and merchant network globally. This merger proved to be beneficial for both companies as they were able to complement each other’s products and services perfectly. For example, Skype added calling capabilities to eBay’s existing messaging system, allowing buyers and sellers to communicate with each other more easily.
In addition, eBay integrated Skype’s voice-over-Internet Protocol (VoIP) technology into its own website, making it possible for buyers and sellers to talk to each other directly from the eBay site. This made it easier for users to conduct transactions on the site and helped build trust between buyers and sellers. The acquisition was widely seen as a way for eBay to expand its reach into new markets and to better compete against its larger rivals, such as Amazon.com and Google. I
n addition, the acquisition gave eBay a strong foothold in the burgeoning market for VoIP (Voice over Internet Protocol) services. Skype has remained an independent entity within eBay since the acquisition and has continued to grow its user base and add new features. In 2009, Skype generated revenues of $551 million and had profit margins of 25%.
5. Dow Chemical and DuPont merger (2015) – $130B
The Dow Chemical Company and DuPont have announced a definitive merger of equals that will create a company with leading market positions in multiple industries, including agriculture, materials science and specialty products. The combined company will be called DowDuPont and will have a combined market capitalization of approximately $130 billion.
The new company will be well positioned to generate significant cost synergies and growth opportunities as it brings together leading positions in complementary businesses. The companies expect to realize approximately $3 billion in annual cost synergies within three years after the transaction closes. These cost synergies are expected to come from a combination of optimizing operations, eliminating duplicative overhead costs and streamlining research and development expenses.
In addition to the cost synergies, the combined company expects to generate significant growth opportunities through Innovation Centers that will focus on developing new applications for existing products, as well as developing entirely new product offerings. The Innovation Centers will leverage the R&D capabilities and expertise of both companies to accelerate the commercialization of new products and technologies. The transaction is expected to close in the second half of 2015, subject to customary closing conditions, including regulatory approvals.
There have been some massive historical mergers and acquisitions over the years. From Google and Motorola to Ebay and Skype, these deals have changed the face of the business world. Some have been incredibly successful, while others have not fared so well.
Looking at these five largest historical mergers and acquisitions, we can see that there are a few key ingredients for success: a complementary fit between the two companies, a clear strategic vision, and a willingness to invest in the long-term growth of the combined entity. With these factors in place, these mega-deals have the potential to create enormous value for shareholders.
Q.1- Which is the highest acquisition company?
Vodafone and Mannesmann (1999) – $202.8B
In 1999, Vodafone Group plc (VOD) acquired German conglomerate Mannesmann AG in a stock-for-stock deal valued at $202.8 billion. The deal created the world’s largest mobile phone company with more than 186 million customers.
The acquisition was completed following a hostile takeover battle that lasted nearly five months. Vodafone initially made a $154 billion offer for Mannesmann in November 1999, which was rejected by the German company’s board of directors. Vodafone then sweetened its offer to $183 billion, which was again rejected.
In January 2000, Vodafone made a final offer of $202.8 billion, which Mannesmann’s board finally accepted. The deal was completed in February 2000, making Vodafone the world’s largest mobile phone company.
The acquisition gave Vodafone access to Mannesmann’s extensive mobile phone network in Europe and also increased its customer base significantly. The deal also made Vodafone the world’s largest provider of digital wireless services. This was the biggest acquisition in the world.
Q.2- What are major mergers and acquisitions in India?
- Zee Entertainment – Sony India Merger
- Indus Tower – Bharti Infratel Merger
- Vodafone Idea Merger
- Tata and Corus Steel
- Walmart Acquisition of Flipkart
- Vodafone Hutch-Essar
Q.3- Which is the biggest acquisition in India?
Aditya Birla Group- Jaypee Cements
The company Jaypee Cements was forced to let go of its IPL franchise, the “Deccan Chargers,” in 2012 due to a large amount of debt that had amassed with them by 2016. Declaring insolvency and following the at the time newly developed NCLT insolvency procedure were the apparent solutions.
Nevertheless, a deal was made with the Aditya Birla group that was finalised in early 2017 and allowed Jaypee to profit by offloading all of its assets to Ultra Tech, another cement business, for a sum of Rs 16189 Cr. While Ultra Tech has an additional 21 million tonnes of production capacity, Jaypee avoided the low valuation in NCLT trials.
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