A business taking over another promising business is a common occurrence in the corporate world. Such acquisitions, also called takeovers, are usually executed as part of a company’s growth strategy and are made for any number of reasons.
The acquiring company may be planning to diversify into a new sector or product line, or it may want to increase its market share and geographical outreach, reduce competition, or profit from patents and licensing that may belong to the acquired target company. Such acquisitions occur at domestic as well as global levels. Here we list the top five high-value acquisitions in global corporate history.
- The acquisition or takeover of one company by another is a key strategy for businesses looking to grow and increase their profitability.
- In global corporate history, the biggest acquisitions have been valued well over $100 billion.
- The most highly-valued acquisition on record occurred in 2000 when British telecom company Vodafone Group (VOD) acquired German telecom giant Mannesmann AG for a staggering $180.9 billion.
Vodafone Acquires Mannesmann AG
In 1999, British multinational telecom company Vodafone Group (VOD) decided to buy German telecom giant Mannesmann AG. The long-running effort by Vodafone’s AirTouch PLC finally paid off in February 2000 when Mannesmann accepted its offer for a $180.95 billion acquisition, making the takeover the largest merger and acquisition (M&A) deal in history.
As the mobile market gained momentum across the globe and growth was at its peak, the large-value merger was expected to reshape the global telecommunications landscape. However, the deal was a failure and Vodafone was forced to write-off billions of dollars in the following years.
American Online Acquires Time Warner
The $165 billion merger between America Online (AOL) and Time Warner Inc. comes in at number two in our list of biggest acquisitions in history. The merger occurred at the height of the dotcom era in 2000 when successful Internet provider, AOL, made a bid to acquire mass media conglomerate, Time Warner. At the time, AOL had a massive market share and was looking to expand even further by tapping into Time Warner's dominance in publishing, entertainment, and news.
However, the expected synergies of the merger never fully materialized. The two companies clashed in management style and culture, something that was only exacerbated by the bursting of the dotcom bubble and the ensuing recession. The value of AOL stock plummetted. Eventually, AOL and Time Warner parted ways, spinning off to operate as independent companies.
Verizon Communications Acquires Verizon Wireless From Vodafone
This next acquisition was worth $130 billion and took place in 2013 when Verizon Communications Inc. (VZ), a leading American multinational telecom conglomerate, took over Verizon Wireless, a dominant player in the U.S. wireless services market. Verizon Wireless came into existence in 1999 through a merger of Vodafone’s Airtouch and Bell Atlantic’s mobile division.
As a part of the acquisition, Verizon Communications took full control of Verizon Wireless from the UK’s Vodafone, leading to the end of Vodafone’s 14-year long stint in the U.S. telecom market. The deal resulted in windfall gains for Vodafone investors as they pocketed £54.3 billion (around $87 billion).
Dow Chemical Acquires DuPont
In Dec. 2015, the two chemical conglomerates—Dow Chemical and DuPont—announced their intention to merge in a deal valued at $130 billion. Completed in Sept. 2017, the combined companies took on the name DowDuPont Inc. and included three divisions: agriculture, materials science, and specialty products.
However, the new conglomerate’s intention was never to remain as one company, but instead restructure the entity by spinning off into separate companies. In 2019, DowDuPont broke up into three distinct companies: Dow Chemical, DuPont, and Corteva. Dow Chemical is a commodity chemical company and DuPont is a specialty chemical maker. Corteva is an agricultural company, producing seeds and agricultural chemicals.
Anheuser-Busch InBev Acquires SABMiller
In 2016, the world’s largest brewer acquired its rival in a merger valued at approximately $104 billion. The much-anticipated merger had Anheuser-Busch InBev (BUD) (maker of brands including Corona, Budweiser, and Stella Artois) taking over London-based SABMiller (maker of brands including Fosters, Castle Lager, and Redd’s).
One focus of the merger was to create a company that could effectively compete in emerging markets that have strong growth potential. According to company management, Latin America and Africa offer the brewing conglomerate opportunities to expand into rapidly-growing regions that should result in increased revenue and market share.
The Bottom Line
While acquisitions in the corporate world are common, not all of them lead to success. Most get executed during a bull run in the economy or a particular industry sector with an expectation of success. However, failures are inevitable for incorrectly executed deals. Some of the biggest disasters in mergers and acquisitions are attributable to multiple factors that may or may not be under the direct control of the entities involved. These include internal issues like cultural integration between the two companies or macro-level problems like overall economic conditions and geopolitical issues.