There have been several mergers and acquisitions in history which are remembered for bringing together some of the biggest companies in the world. While some mergers and acquisitions caused a stir in the business world because of their scale and the capital involved, some made headlines for causing billions of dollars of losses to shareholders.
The economic history of the world is divided into six ‘merger waves’. The first wave was in the ensuing period of 1897-1904, while the sixth wave spanned from 2003 until 2008.
Mergers and acquisitions (M&As) have been a part of the corporate sphere for a long time. There have been numerous historic mergers and acquisitions which have resulted in the creation of some of the most successful companies in the world. Some famous companies such as PricewaterhouseCoopers – merger between Coopers & Lybrand and Price Waterhouse, and GlaxoSmithKline – merger between Glaxo Wellcome and SmithKline Beecham, are a result of M&As.
Although M&As happen with companies of all shapes and sizes, some of them are particularly notable because of the total capital involved, and the impact on shareholders’ money. Mentioned below are 10 of the largest M&As of all time, in chronological order.
Largest Mergers and Acquisitions
#1. Travelers Group with Citicorp
Citicorp and Travelers Group became a single entity in 1998, in a merger that was reported to be in the excess of $70 billion. The new company, known as Citigroup, was claimed to have $700 billion in assets, and a net revenue of around $50 billion. At that time, the deal had made Citigroup the number one financial services company in the world.
#2. Exxon Corporation with Mobil Corp
Exxon and Mobil Corporation were two of the biggest oil companies in the world. In 1998, the two companies merged in a deal that was valued at $80 billion. The merger resulted in the creation of ExxonMobil, the world’s largest company by revenue and market capitalization. This merger was being held up by the Federal Trade Commission (FTC), as both Exxon and Mobil were competitors in more than 40 metropolitan areas of the US. The deal came through only after both the companies agreed to sell more than 2,400 gas stations around the US, as mandated by the FTC.
#3. Vodafone AirTouch with Mannesmann AG
Vodafone’s alleged ‘hostile’ acquisition of German mobile network company Mannesmann in 1999 was one of the biggest M&As in recent history. The acquisition was in the news not only for being worth $200 billion, but also for the fact that it stoked nationalistic emotions in Germany and Britain. Mannesmann, which was a hallowed name as far as Germany’s private sector is concerned, bought Orange – one of UK’s prominent mobile carriers, while it was still in partnership with Vodafone – UK’s biggest network provider. Mannesmann’s takeover of Orange put the company in direct competition with Vodafone, which responded by making an offer which was too good for the German company. Although the acquisition was known to be hostile, it resulted in the creation of one of the biggest telecom companies in the world.
#4. Glaxo Wellcome PLC with SmithKline Beecham PLC
In 2000, two of the biggest pharmaceutical companies in the world – Glaxo Wellcome and SmithKline Beecham – merged to become GlaxoSmithKline. The merger was reported to be worth $75 billion. Known as one of the biggest mergers in the pharmaceutical sector, the merger made GlaxoSmithKline the biggest drug maker in the world, with an estimated net worth of $130 billion.
#5. Pfizer with Warner-Lambert
GlaxoSmithKline’s arch-rival Pfizer acquired Warner-Lambert for around $88 billion in 2000, a deal which increased Pfizer’s net worth to $230 billion. At that time, the deal was considered to have changed the dynamics in the pharma industry, making Pfizer the second largest drug company in the world, after GlaxoSmithKline.
#6. America Online (AOL) with Time Warner
AOL, previously known as America Online, got into a historic merger with Time Warner, in 2001. The merger was billed to be worth a whopping $165 billion. When the two companies merged, it was thought that they will herald a new future in the world of Internet and entertainment, as AOL was a major player on the Internet, and Time Warner had the biggest repository of quality content. However, soon after they merged, the dot com bubble burst, making the merger a bad decision for both the companies. Time Warner particularly was badly hit, and underwent losses to the tune of $99 billion in 2002. Both companies signed a demerger agreement in 2009. Time Warner chief Jeff Bewkes later admitted that the AOL merger was ‘the biggest mistake in corporate history’.
#7. Pfizer with Pharmacia Corporation
Seems like mergers and acquisitions are the norm at Pfizer. After tying up with Warner-Lambert in 2000, Pfizer acquired Pharmacia Corporation in 2003, for an estimated sum of $89 billion. The move was strategically aimed at propelling Pfizer to become the world leader in research and manufacture of new drugs. The merger saw new Pfizer’s total market rise to a staggering $256 billion.
#8. Royal Dutch Petroleum with Shell Trading & Transport
Royal Dutch Petroleum and Shell Trading & Transport were in alliance since 1907 to compete against the Rockefeller-owned Standard Oil. The company worked on a 60-40 structure, with 60% of controlling interest going to Royal Dutch Petroleum, and the rest going to Shell. Owing to the growing clamor to streamline their process in order to create a single control center, both the companies officially merged to become Royal Dutch Shell. The merger took place in 2004, and was reported to be worth $75 billion.
#9. Royal Bank of Scotland, Fortis, and Banco Santander with ABN AMRO
In 2007, a consortium of RBS, Fortis, and Banco Santander – three leading banks of Europe, acquired ABN AMRO – a Ducth bank. The acquisition was reported to be worth $99 billion. The takeover was being billed as the biggest in the banking sector. However, the acquisition proved to be a bad decision, as the banking sector was tremendously affected by the sub-prime crisis of 2007 – 2008. The impact of the mortgage crisis was so profound on the banks, that the British and the Dutch government had to bail out RBS and ABN AMRO respectively, with taxpayers money.
#10. Shareholders/Altria with Phillips Morris Intl.
US cigarette company Philip Morris International (PMI) operated under the Altria Group, a business house based in Virginia, USA. In 2008, the Altria Group decided to spin off Philip Morris International for $108 billion. Altria wanted PMI to have more freedom in developing sales in the emerging markets of the world, which was restricted due to the strong anti-tobacco regulatory laws in the US.
These were some of the biggest mergers and acquisitions of all time. The M&As we have listed in this article created a lot of frenzy at the time of their announcement. However, not all of them were able to capitalize on their combined resources.