Merger and acquisition deals make the world go round and with time, deal values and complexities continue to increase. And there are many different reasons why companies pursue mergers and acquisitions (M&A), such as asset or technology acquisition. For example, a target company has a specific in-house warehouse operation that another company has been outsourcing for years. In this article, we will give famous examples of company mergers.
Mergers and acquisitions can be a sell or buy-side deal. Depending on which type of deal it is, determines what type of institutions are involved.
Examples of Sell-Side Firms
Examples of Buy-Side Firms
US companies have always been prone to M&A deals, and here are some of the largest M&A deals in our history. Also learn how Innovative M&A Platform for Mergers and Acquisitions help process these types of deals.)
Read about 13 of the most successful mergers in history. And as history has shown us, the largest acquisitions with the most potential, do not always turn out like they were expected to.
In 2006, Walt Disney Co. acquired Pixar for $7.4 billion. Since then, movies such as Finding Dory, Toy Story 3, and WALL-E, have generated billions in revenue. Three years after the Pixar acquisition, Disney’s CEO Bob Igner, set out to acquire Marvel Entertainment for $4 billion.
Considering 11 Marvel movies have brought in more than $3.5 billion since the acquisition, and is a good example of a successful acquisition across all fronts.
In 2005, Google acquired Android for an estimated $50 million. At the time of the deal, Android was an unknown mobile startup company. The move made it possible for Google to compete in a market owned by Microsoft with Windows Mobile and Apple’s iPhone. This deal is a successful acquisition example, 54.5 percent, of U.S. smartphone subscribers use a Google Android device as of May 2018.(www.statista.com)
In 1998, Exxon Corp. and Mobil Corp. made news when they announced their plans to merge. At the time, the companies were the first and second largest U.S. oil producers. The deal closed at a whopping $80 million and since the deal was made; investors have quadrupled their money and shares have gone up 293 percent with dividends reinvested.
This deal is a good example of a horizontal merger.
Other Examples of Horizontal Mergers
The merger between Vodafone and Mannesmann occurred in 2000, and was worth $180 billion. This is the largest mergers and acquisitions transaction in history. Vodafone, a mobile operator based in the United Kingdom, acquired Mannesmann, a German-owned industrial conglomerate company. This deal made Vodafone the largest mobile operator, and aimed to set the stage for future telecom deals.
Ironically enough, even though it is the largest merger in history, it was not successful. America Online and Time Warner- American Online, known by most people as AOL, acquired Time Warner for $164 billion in 2000. During the time of the acquisition, the most common way to access the internet was through their landline phone service provided by AOL. Due to the change in the way Americans accessed the internet and various company cultural issues, the deal only lasted nine years and Time Warner became an independent company in 2009.
In 2000 Pfizer acquired Warner-Lambert for $90 billion, both companies in the pharmaceutical drug industry. It is known as one of the most hostile acquisitions in history, due to the fact that Warner-Lambert was originally going to be acquired by American Home Products, a consumer goods company. American Home Products walked away from the deal, resulting in large break-up fees, and Pfizer swooped in.
Pfizer had their eye on Warner-Lambert because of a highly demanded cholesterol medication Lipitor. “Pfizer had commercial rights to Lipitor, but Pfizer was splitting profits on it with Warner-Lambert, and in 1999, Warner-Lambert sued Pfizer to end their licensing pact.” The acquisition created the second largest drug company, took three months, and Pfizer obtained control of Lipitor’s profits, which amounted to over $13 billion.
Verizon Communications and Vodafone jointly came up with Verizon Wireless. However, Verizon later acquired Vodafone's 45 percent stake in a transaction that amounted to $130 billion. Now, Verizon Wireless is completely owned by Verizon Communications.
In 2008, the Altria Group Inc. gave their approval to the spin-off of Philip Morris International. Prior to this, Philip Morris was a wholly owned subsidiary of Alria. As part of the spin-off agreement, all Altria shareholders received a share of Philip Morris International. Also, Altria agreed to sell Marlboro exclusively in the United States, while Philip Morris sells Marlboro internationally.
One of the biggest telecommunication giants in the world, AT&T acquired BellSouth (BLS) in a deal that grossed $67 billion. AT&T, as a result, got a local customer base of 70 million people which helped them strengthen their hold over the industry.
The banking giant, Citicorp, created a historic merger when they decided to come together with Travelers Group in 1998. The $70 billion deal had a tremendous influence on the financial services industry in the country, and the merger gave birth to Citigroup Inc.
The year 2000 saw one of the biggest mergers in history when America Online (AOL) joined hands with Time Warner Inc. AOL, an internet provider, merged with Time Warner, the entertainment conglomerate, to create AOL Time Warner. The deal was worth $165 billion and is considered to be a landmark in the M&A world. However, the merger fell through soon after.
The $130 billion merger between Dow Chemical and DuPont was announced in 2015 and took two years to complete, finally closing in 2017. Both Dow Chemical and DuPont were seen as examples the merger aimed to create highly focused businesses in material science, agriculture, and other specialty products.
The combined company is known as DowDuPont Inc. and is listed on the New York Stock Exchange. Dow Chemical shareholders received a fixed exchange ratio of 1.00 share of DowDuPont for each Dow Chemical market share they had. And for the other side, DuPont shareholders received a fixed exchange ratio of 1.282 shares of DowDuPont for each DuPont market share they had.
Anheasur-Busch InBev became the largest brewer back in 2008 when Anheasur-Busch was acquired by InBev for $52 million.
In 2016, the two largest brewers in the world, Anheuser-Busch InBev and SABMiller, merged. The deal was worth $104.3 billion and combined In Bev’s Budweiser, Stella Artois, and Corona brands with SABMiller’s Castle Lager, in hopes to take them into the African and Latin American Markets.
In 2015, the boards of both companies, along with the approval from shareholders and regulatory authorities, agreed to a merger worth $100 billion. The newly formed Kraft Heinz Company became the third largest food and beverage company in the United States, and the fifth largest worldwide. Many household food brands such as Philadelphia, Capri Sun, and Heinz Tomato Ketchup, now fall under one roof.
Unfortunately, not every M&A deal goes well, or is even wanted by both parties in the first place.
For example, a leveraged buyout is usually considered a hostile takeover. This is when a company is acquired using a significant amount of borrowed money (debt) to meet the cost of acquisition. The acquired company then assumes that debt.
A leveraged buyout usually has three main purposes and that is to either privatize a public company, break up a large company, and improve an underperforming company (the soon to be acquired firm) and the economies of scale. A fourth, less company reason, is to enrich shareholders and owners. Leveraged buyout investment firms are more commonly known as private equity firms. Often times, even though a leveraged buyout is viewed as hostile, many private equity deals turn out successful and highly valuable.
One of the most aggressive, controversial, and largest acquisition buyouts of all time happened in the 1980s. Kohlberg Kravis Roberts & CO bought RJR Nabisco Inc. for $25 million. The enterprise value of the deal was then estimated at $31 billion which is equivalent to approximately $55 billion today. A book and movie were even created to showcase how dramatic the deal was.
Overall, it’s hard to argue which deal in US history is the most successful merger or acquisition due to the fact that sometimes the full value and potential of a deal takes years.
DealRoom’s M&A project management software and tools aims to help teams manage their complex M&A transactions. Whether teams need deal management software, deal flow tracking software, due diligence process assistance, help with their post merger (PMI) process, or just a simple VDR, our platform provides the necessary technology and features to streamline M&A processes.