The 12  Largest Company M&A Deals list

What is an Acquisition?

An acquisition is when one company buys out most or all of another company’s shares to gain control of that company. Purchasing more than 50% of the target firms stock and other assets allows the acquirer the controlling rights. This allows him to make decisions about the newly acquired assets without the approval of the company’s other shareholders. 

A bigger business group taking over another promising business or company is a common occurrence in the corporate world. Such business acquisitions also called as takeovers are usually executed as part of a company’s growth plan and such strategies are implemented for a number of reasons.

The last decade saw a slowdown in many developed and emerging economies. This slowdown made many business groups think about strategies to sustain growth. Many business groups chose the option of mergers and acquisitions. They chose to combine their businesses to form a new entity and face the adverse situation with new vigor and zeal. But the hard fact is that whatever the size or scale of the acquisition, financial transactions of this kind are always complicated and fragile at the best of times. 

Acquisitions are very common in business, and it may occur with the target company’s approval, or in spite of its disapproval. With approval, there is often a no-shop clause during the acquisition process. A no-shop clause is a clause found in an agreement between the seller and a potential buyer that bars the seller from soliciting a purchase proposal from any other party. In other words, the seller cannot shop the business or asset around once a letter of intent or agreement in principle is entered into between the seller and the potential buyer. The letter of intent outlines one party’s commitment to do business and/or execute a deal with another.

No-shop clauses, which are also called no solicitation clauses, are usually prescribed by large, high-profile companies. Sellers typically agree to these clauses as an act of good faith. Parties that engage in a no-shop clause often include an expiration date in the agreement. This means they are only in effect for a short period of time, and cannot be set indefinitely.

Larger companies or groups often acquire other companies for various reasons. They may be seeking economies of scale, diversification, bigger market share, enhanced synergy, cost reductions, or new niche offerings. Other reasons for acquisitions could include those listed below.

As a Way to Enter a Foreign Market

If a company wants to expand its operations to another country, buying out an existing company in that country is the easiest way to enter a foreign market. The purchased business will already have its own personnel, a brand name, and other intangible assets, which could help to ensure that the acquiring company will start off in the new market with a solid and sound foundation.

It could be a Growth Strategy

Perhaps a company has physical or logistical constraints or could have depleted its resources. In such a situation it is often wise for the encumbered  company to acquire another firm than to expand its own. Such a company might look at promising young companies or start-ups to acquire and incorporate into its revenue stream as a new way to profit.

Reduce Excess Capacity and Decrease Competition

If there is too much competition or supply, companies may look at acquisitions to reduce excess capacity, eliminate the competition, and focus on the most productive providers.

To Gain New Technology

Sometimes it can be more cost-efficient and effective for a company to purchase another company that has already implemented a new technology successfully than to spend the time and money on developing the new technology itself.

What Are the Different Types of Acquisition?

Often, a business acquisition or merger can be categorized in one of four ways:

• Vertical: Here the parent company acquires a company that is somewhere along its supply chain, either upstream (such as a vendor/supplier) or downstream (a processor or retailer).
• Horizontal : Here the parent company buys out their competitor or other company in their own industry sector, and at the same point in the supply chain.
• Conglomerate: Here the parent company buys a company in a different industry or sector entirely, in a peripheral or even unrelated business.
• Congeneric: Here the company buys out for market expansion. This occurs when the parent buys a firm that is in the same or a closely-related industry, but which has different business lines or products.

Mergers and acquisitions or takeovers occur at national as well as international levels. Acquisitions are often carried out with the help of an investment bank, as they are complex arrangements with legal and tax ramifications.

When it comes to mergers and acquisitions, bigger acquisitions don’t always necessarily mean better. There are many examples we have included in our list that are the biggest failures.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 your deal is a mega deal or not, you have to be careful and evaluate thoroughly and diligently. At DocullyVDR, one of the worlds most acknowledged data room service providers, we help companies evolve and streamline multiple large and successful M&A deals each year.

In global corporate history, the biggest merger and acquisitions are normally valued well over $100 billion. The most highly-valued acquisition on record till yet, occurred in 2000 when British telecom company Vodafone Group (VOD) acquired German telecom giant Mannesmann AG for a staggering $180.9 billion. 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.

 

Here is the list of the top high-value acquisitions in global corporate history:

1. Vodafone and Mannesmann (1999) – $202.8B

As of November 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 company.

This deal, is the perfect example of an excellent acquisition, as it transformed Vodafone in to the world’s largest mobile operator and set the scene for dozens of mega deals in the telecommunications industry in the years that followed. This deal goes down as the biggest acquisition in history.

2. AOL and Time Warner (2000) – $182B

This famous merger of AOL and Time Warner in 2000 is a case in point that a big acquisition doesn’t always mean a better acquisition. In little over two decades, the deal has become the perfect example of how not to conduct mergers and acquisitions.

It features everything from overpaying to strong cultural differences and even, two large media companies who just weren’t sure where the media landscape was heading. 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 9 years later after it was originally signed.

3. Gaz de France and Suez (2007) – $182B

Large French companies compete on a world stage, waving the tricolor, showing their solidarity to their nation. It was no surprise then, when Nicholas Sarkozy, President of France in 2007, stepped in to save this merger.

The President played 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.

One of the biggest mergers ever in the energy sector  this deal, 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 innumerable merger and acquisition transactions over the past 2 decades. The $130B deal in 2013 allowed Verizon to pay for its US wireless division.

At that 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 to contend with an increasingly competitive communications landscape.

From Vodafone’s point of view, the acquisition cut the company value roughly in half, to $100 billion. The business acquisition also relegated 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

Dow Chemical and DuPont announced they were merging in 2015. It was the merger of equals that created the largest chemicals company by sales in the world. It also eliminated 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 this didn’t last long as in 2019, its management announced that the merged company would be split into three separate companies, each with a separate objective. 

6. United Technologies and Raytheon (2019) – $121B

This merger deal closed in the first half of 2020  and was another classic example, of the merger of equals, although its long-term impact is yet to be determined.Raytheon Technologies, as the merged company is called, claims that the merger defines the future of aerospace and defense. It has created the most advanced aerospace and defense systems provider company in the world. Raytheon leverages United Technologies’ expertise in high temperature materials for jet engines; and in directed energy weapons, as 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 confident about the prospects and the company’s share price has taken a dip of around 25% after the deal was finalized.

7. AT&T and Time Warner (2018) – $108B

This merger of AT&T and Time Warner drew criticism from antitrust regulators when it was announced. It also revived the not so pleasant memories of the previous mega deal by Time Warner.

With almost two decades to learn from its mistake, and AT&T as a much bigger cash generator than AOL, this deal looks like it has been better thought through by Time Warner than the deal that preceded it. 

8. AB InBev and SABMiller merger (2015) – $107B

On paper, the deal of the creation of AmBev through the merger of InBev and SABMiller in 2015 looked good – two of the world’s biggest brewers bringing a host of the world’s favorite beers into one stable. But there was just one problem – they didn’t foresee the rise of craft beers and how it would disrupt the brewing industry. But today after several bolt-on acquisitions of craft brewers later, the new company finally seems to 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 the creation of 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 the stock 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 termed a “mega-mess,” with billions knocked off the stock price since the deal closed. The reasons have been allegations made about accounting practices at the two firms before the merger, and the zero-based budgeting (ZBB)- a strict cost cutting measure that came at a time when old brands needed to be refreshed with infusion of budget rather than slashing their budgets.

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. 

12. Exxon and Mobil

The Exxon and Mobil deal is the perfect example of a successful merger. In 1998, Exxon and Mobil, the first and second-largest oil producers in the United States made headlines after announcing their plans to merge.

The deal closed at a whopping $80 billion and since then, investors have quadrupled their money and shares have gone up 293% with dividends reinvested. Despite initial skepticism, the merger is looked back on as one of the most successful in history. 

13. Google and Android

Google acquired Android for an estimated $50 million back in 2005. At the time, Android was an unknown mobile startup company so the move raised some eyebrows.However, the acquisition gave Google the tools it needed to compete in a market dominated by Microsoft and Apple. 

Google is more than familiar with acquisitions of this kind, but this particular deal is seen as one of the most successful as more than 47% of US smartphone owners use a Google Android device as of May 2020.

14. Disney and Pixar/Marvel

Disney is really adept at acquiring other profitable companies. The entertainment behemoths first acquired Pixar in 2006 for a cool $7.4 billion. Although a staggering fee at that time, the now joint studio has since released hits such as WALL-E and Toy Story 3, generating billions in revenue. 

Three years after acquiring Pixar, Disney completed the same process with Marvel Entertainment. Like with Pixar, the subsequent films that were produced brought in billions at the box office. With each successful blockbuster, these acquisitions look more and more successful. 

Conclusion:

While acquisitions in the corporate world are common, not all of them are successful. Most of the deals 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 failures in an merger and acquisition deal are due to multiple factors that may or may not be under the direct control of the companies involved. These include internal issues like cultural integration between the two companies or macro-level problems like overall economic conditions and geopolitical issues or even a change in consumer preference to their type of product.