What Are The 5 examples Of Hostile Takeovers That Actually Worked?
The most famous acquisitions in the past year have been in the pharmaceutical, entertainment, telecom, bank, and software industries. All of these acquisitions required billions of dollars and bonuses for the target company’s shareholders. The acquiring companies put a lot of effort into acquiring their targets and understanding their businesses. ..
AOL And Time Warner
On January 10, 2000, AOL acquired Time Warner for $182 million in stock and debt. This acquisition was called “The deal of the millennium” because it was one of the most famous and greatest takeovers in history. After the acquisition, AOL shareholders owned 55% of the new company whereas Time Warner shareholders had 45% rights to the company. ..
AOL Time Warner’s stock price plummeted after the dot-com bubble burst, putting the company at greater risk than ever. Investors began selling off stocks, making AOL Time Warner more vulnerable. ..
Sanofi-Aventis And Genzyme Corp
In 2010, a French pharmaceutical company, Sanofi-Aventis, took over an American pharmaceutical company called Genzyme Corporation. This takeover was hostile in nature, as Sanofi-Aventis was not content with the direction Genzyme was taking.
The takeover of Sanofi-Aventis by Genzyme was a strategic move by Sanofi-Aventis to increase its wealth and the company’s reputation.
Sanofi-Aventis successfully convinced its major shareholders to support the acquisition of Genzyme. The cash offer made was $20.1 billion, while the other bonus payments made to the shareholders were around $3.6 billion.
Oracle And PeopleSoft
Oracle acquired PeopleSoft in 2004 for $16 per share. The takeover was finalized for approximately $10.3 billion.
Vodafone AirTouch And Mannesmann AG
Vodafone AirTouch acquires Mannesmann AG in 2000 for $190 billion. This acquisition made Vodafone the world’s fourth-largest publicly traded company. It was said that the acquisition was made possible, because of the hand sum amount of bonuses that were made by Vodafone, to Mannesmann’s shareholders. Nevertheless, the acquisition was one of the most successful mergers of all time. ..
RBS And ABN AMRO
The biggest bank takeover in the history of Europe took place when RBS, Royal Bank of Scotland, took over the Dutch Bank, ABN for $98.5 billion. However, during the financial crisis of 2007, RBS regretted taking over as it was out of capital and the government had to save it from collapse. This later resulted in the government owning 60% of the bank.
Bottom Line
Now we have learnt that hostile takeovers can be successful, with five examples of mergers that succeeded. All these acquisitions required a lot of money and negotiations that brought the success they later had. A few of the mergers were the result of a wise decision by management; however, some of the firms later regretted the acquisition. ..
A company can resist a takeover by doing a number of things, including developing a strong business case, investing in its own resources, and maintaining control over its operations.
There are a lot of ways for a company to avoid being taken over. Some involve planning; having different voting rights for stock can limit the control of shareholders. The company can also create an ESOP, which will give employees ownership of the firm. ..
There are a few ways to make a takeover less attractive for the acquirer. One way is to make it clear that the acquirer is not the only interested party in the company. Another way is to make it clear that the company is not in good shape and needs help. Finally, another way is to make it clear that the company is not worth taking over.
Companies can make hostile takeover attempts less attractive by making provisions in their corporate governance documents to sell the company’s most valuable asset if a takeover attempt is made. This is called a “Crown Jewel” defense. ..
A takeover can have a significant impact on share prices, depending on the company and its stock.
The firm that is acquired experiences a change in share price after the merger because when a company wants to take over another company, it is aware of the fact that the target company is not fully maximizing the shareholders’ value. This means that when a company merges with another company, it provides a way for the target company to do so by making it easier for them to be bought out.
