When it comes to mergers and acquisitions, bigger doesn’t always mean better – the examples we included in our list of the biggest M&A failures is evidence of that.
In fact, all things being equal, the bigger a deal becomes, the bigger the likelihood that the buyer is overpaying for the target company.
So, whether you like mega deals or not, we cannot afford to ignore them.
In this guide, we collected 11 examples of the biggest mergers and acquisitions deals in history, powerful merger and acquisition examples and more.
Biggest Mergers and Acquisitions Examples List
Reading this list, it can seem that most megadeals are doomed to failure (at least from the perspective of their shareholders). But thankfully, that just isn’t the case. Some of the biggest deals of the past 20 years have been outstanding successes.
Many of these deals have achieved what they set out to do at the outset – to reshape industries on the strength of a single deal.
With that in mind, let’s take a closer look at 11 companies that recorded the largest mergers and acquisitions in history.
1. Vodafone and Mannesmann (1999) – $202.8B
As of June 2022, the largest acquisitions ever made was the takeover of Mannesmann by Vodafone occurred in 2000, and was worth ~$203 billion. Vodafone, a mobile operator based in the United Kingdom, acquired Mannesmann, a German-owned industrial conglomerate company.
This deal, that resembles a perfect example of an acquisition, made Vodafone the world’s largest mobile operator and set the scene for dozens of mega deals in the mobile telecommunications space in the years that followed. This deal goes down as the biggest acquisition in history.
2. AOL and Time Warner (2000) – $182B
When we mentioned at the outset of this article that ‘big doesn’t always mean better’, the famous merger of AOL and Time Warner in 2000 is a case in point. In little over two decades, the deal has become cemented as the textbook example of how not to conduct mergers and acquisitions.
It featured everything from overpaying to strong cultural differences and even, with the benefit of hindsight, two large media companies who just weren’t sure where the media landscape was headed. The merger’s valuation came crashing down after the dot-com bubble burst just two month after the deal was signed.
The deal, which is to be known as the largest merger in history, fell apart in 2009, 9 years later after it was originally signed.
3. Gaz de France and Suez (2007) – $182B
France loves its national champions – the large French companies that compete on a world stage, waving the tricolor. It was no surprise then, when Nicholas Sarkozy, President of France in 2007, stepped in to save this merger.
That’s right – a President playing the role of part-time investment banker. These days, Suez is one of the oil and gas ‘majors’, although the fact that the company’s share price hovers very close to where it was a decade and a half ago tells us everything of what investors thought of the deal.
The deal, one of the biggest mergers ever in energy, created the world’s fourth largest energy company and Europe’s second largest electricity and gas group. The merged companies created a diversified, flexible energy supply stream with high-performance electricity production base.
4. Verizon and Vodafone (2013) – $130B
Vodafone has been involved in so many transactions over the past 20 years that they should be getting quite efficient at the process at this stage. The $130B deal in 2013 allowed Verizon to pay for its US wireless division.
At the time, the deal was the third largest in history – two of which Vodafone had partaken in. From Verizon’s perspective, it gave the company full control over its wireless division, ending an often fraught relationship with Vodafone that lasted for over a decade, and also allowed it build new mobile networks and contend with an increasingly competitive landscape at the time.
From Vodafone’s point of view, the acquisition cut the company value roughly in half, to $100 billion. The business acquisition also moved Vodafone from the second largest phone company in the world down to fourth, behind China Mobile, AT&T, and Verizon.
5. Dow Chemical and DuPont merger (2015) – $130B
When Dow Chemical and DuPont announced they were merging in 2015, everyone sat up and took notice; the merger of equals would create the largest chemicals company by sales in the world, as well as eliminate the competition between them, making it a picture-perfect example of horizontal merger.
Shortly after the deal was completed, in 2018, the company was already generating revenue of $86B a year – but it didn’t last long: In 2019, management announced that the merged company would spin off into three separate companies, each with a separate focus.
6. United Technologies and Raytheon (2019) – $121B
Another classic merger example, so-called “merger of equals.”
The long-term impact of the United Technologies and Raytheon deal has yet to be felt, given that the deal closed in the first half of 2020 (not the best of years to close a transaction in).
Raytheon Technologies, as the merged company is called, claims that the merger “defines the future of aerospace and defense and creates world’s most advanced aerospace and defense systems provider”.
Now that the deal went through, Raytheon can leverage United Technologies’ expertise in high temperature materials for jet engines; and in directed energy weapons, United Technologies has relevant power generation and management technology.
The companies expect to reap $1 billion in annual cost synergies by the fourth year after the merger is closed, mostly at the corporate level. So far, however, investors seem less convinced with the company’s share price taking a dip of around 25% straight after the deal closed.
7. AT&T and Time Warner (2018) – $108B
Not only did the proposed merger of AT&T and Time Warner draw criticism from antitrust regulators when it was announced, it also brought back memories of the previous time Time Warner had been involved in a megadeal.
With the best part of two decades to learn from its mistake, and AT&T a much bigger cash generator than AOL, this deal looks like it has been better thought through than the deal that preceded it.
8. AB InBev and SABMiller merger (2015) – $107B
If stock price is any indication of whether a deal was successful or not, then the creation of AmBev through the merger of InBev and SABMiller in 2015 certainly wasn’t.
On paper, the deal looked good – two of the world’s biggest brewers bringing a host of the world’s favorite beers into one stable.
There was just one problem – they didn’t foresee the rise of craft beers and how it would disrupt the brewing industry. Several bolt-on acquisitions of craft brewers later and the new company may finally be on track again.
9. Glaxo Wellcome and SmithKline Beecham merger (2000) – $107B
The merger of the UK’s two largest pharmaceutical firms in 2000 led to what is currently the 6th largest pharmaceutical firm in the world, and the only British firm in the top 10.
However, like several deals on this list, it wasn’t received particularly well by investors and at the time of writing is trading at about 25% less than the time of the merger.
This, and a range of bolt-on acquisitions in the consumer space over the past decade, may explain why the company is planning to split into two separate companies in the coming years.
10. Heinz and Kraft merger (2015) – $100B
The merger of Heinz and Kraft – to create the Kraft Heinz Company – is yet another megadeal that has a detrimental effect on stock.
The deal has been called a “mega-mess,” with billions knocked off the stock price since the deal closed. One of the reasons has been allegations made about accounting practices at the two firms before the merger.
Another reason has been zero-based budgeting (ZBB), a strict cost cutting regime that came at a time when old brands needed to be refreshed rather than have their budgets cut back.
11. Bristol-Myers Squibb and Celgene merger (2019) – $95B
Despite the massive size of the transaction, this 2019 megadeal wasn’t a “merger of equals.” Instead, Celgene became a subsidiary of Bristol-Myers Squibb. The deal brings together two of the world’s largest cancer drug manufacturers, so hopefully the deal amounts to something much greater than the sum of the parts.
And that concludes our list of 11 biggest company mergers and acquisitions ever made.
Which deals, however, resemble examples of a proper merger or an acquisition transaction? And what is the difference?
Following are M&A deals that represent company merger transactions, as well as acquisitions.
A merger is a transaction of two companies, usually of similar size, in which the shareholders of each of the two separate companies, jointly own the shares of the company that arises after the merger.
This is distinct from an acquisition, where one company (the buyer) buys the outstanding shares of a target company, and the target company’s shareholders receive the proceeds from selling those shares.
Vertical Merger – eBay acquires PayPal (2002)
An example of a real vertical merger is the 2002 transaction between eBay and PayPal.
In an attempt to help eBay further purchases made on their online marketplace, they acquired PayPal to help their online users transfer money more easily.
PayPal provides the ability to transfer payments online from one user to another, so when eBay and PayPal merged, the simple way to conduct a transaction helped increase the profits and success of not just eBay, but also PayPal.
Royal Dutch Petroleum and Shell (2004) – $95B
This merger was a slightly unorthodox one in that both companies had previously been the same company before splitting (albeit, over a century before), and each one held stock in a pre-existing company Royal Dutch Shell.
The point is that the merger made sense as it reduced several layers of management and increased the company’s asset base. Furthermore, it came right before oil hit its historic highs before the financial crash of 2008. The combined company is today one of the few European oil and gas majors.
Pfizer and Warner Lambert (1999) – $90B
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.
An acquisition is a transaction whereby companies, organizations, and/or their assets are acquired for some consideration by another company. The motive for one company to acquire another is nearly always growth.
In the next section, we look at some of the acquisition examples in more detail.
The acquisition to extend the product line – Coca-Cola and Monster acquisition (2015)
The Coca-Cola fridge is instantly recognizable worldwide, but its contents have continued to change over the decades in response to consumer tastes. In 2015, recognizing a global thirst for energy drinks, the Coca-Cola company went looking for a popular energy drink to bolster its portfolio.
It acquired a stake in energy drink business Monster – the world’s second largest selling energy drink after Red bull – for $2.15bn, allowing customers to open that fridge and take out a cola, a lemonade, an orange, water, juice or an energy drink, which are all amongst Coca-Cola’s product and brand portfolio.
Such is the power of an acquisition that extends a company’s product line.
The acquisition as part of a roll up strategy – Salesforce and Slack acquisition (2021)
Salesforce is an example of a company that has made acquisitions a central part of its growth strategy.
Its acquisition of Slack for $27.7 billion in July 2021 was made after the company realized that the workplace had changed forever as a result of the Covid-19 pandemic.
The Slack acquisition, however, is just one of many that have allowed the company to become a leader in the workplace technology space.
The acquisition to acquire technology – Google acquires Android (2005)
Despite closing hundreds of small add-on technology acquisitions, Google (or Alphabet, as it’s now officially called) made what is widely regarded as its best acquisition nearly 20 years ago.
The acquisition of Android in 2005 for $50 million, enabling Google to enter the cellular phone market for the first time.
To say that the acquisition was a success would bean understatement: in 2020, the Android operating system was the operating system operating in over 70% of the world’s mobile technology, with this figure reported to increase in the following years.
Bonus: Newer & Successful Mergers and acquisitions
There are quite a few M&As on the larger side that happened in recent years. While we do not know the long-term success yet of these M&As, they could have solid potential and you might want to keep an eye on them. Here is an interesting statistic, according to a report by a law firm White & Case:
The total value of mergers and acquisitions for 2022 rose to $2.6 trillion.
- BMO Financial Group and Bank of the West (2021) – $105B
- Walt Disney and 21st Century Fox (2017) – $84.2B
- Microsoft and Activision Blizzard (2022) – $68.7B
- S&P Global and IHS Markit (2020) – $44B
- Nvidia and Arm Holding (2020) – $40B
- Altimeter and Grab Holdings (2021) – $40B
- AstraZeneca and Alexion Pharmaceuticals (2020) – $39B
- Lionheart Acquisition Corp. and MSP Recovery (2021) – $32.6B
1. Facebook’s and Whatsapp acquisition (2014) – $22B
Take the example of Facebook’s acquisition of Whatsapp in 2014 for $22B. Although the internet was awash with analysts using the word “overpaid”, time – and the fact that the platform has 70 million users in the US alone – have proven them wrong.
The app also provides potential for Facebook to bring more businesses onto its advertising program, with thousands of businesses coming onto the platform every day.
2. Charles Schwab and TD Ameritrade merger (2019)
Elsewhere, the merger of Charles Schwab and TD Ameritrade in 2019 looks like it will be a long-term value generator. That’s already reflected in the stock price, which is significantly higher than when the deal was announced.
The merger gives the combined company a massive online presence in the online brokerage industry. And with trading fees falling precipitously, it’s not hard to see how scale will become increasingly important.
3. Salesforce and Slack acquisition (2021) – $27.7B
Finally, although the deal has just closed, the acquisition of Slack by Salesforce for a reported fee of $27.7B looks to be a winning combination.
The deal is the second biggest of all time for a software company (the largest being IBM’s 2019 acquisition of RedHat) but already looks like it has the potential to generate massive synergies for both companies.
Time will tell, but this one looks like it could be a winner.
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 to formulate.
However, the top mergers and acquisitions take into account best practices such as robust communication, focus on the strategic goal/deal thesis, and early integration planning throughout the deal lifecycle.
Much can be learned from companies that have successfully merged with or acquired other companies.
Whether teams need deal management 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.
Editor’s Note: Klson Patel article was published in dealroom.net.
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2. Buy in of staff from both companies, shareholders, and customer loyalty.
3. World trends and obsolescence e.g. disruptive new technologies,
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Internet (e.g. cloud computing) killed physical books, directories, maps, brochures, manuals, printing, printers.
Web3 (e.g. blockchain, DeFi, crypto, NFTs, metaverse) is killing traditional banking, cash currencies, big tech and government control,
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Published: 3 July 2022.
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