The 5 Largest & Wildest Business Buyouts Of All Time
The biggest business deals in history are speckled with hostile takeovers, intrigue and horrible pitfalls. While Microsoft’s $69 million deal with Activision Blizzard might seem like a huge deal, there have been much bigger deals out there with a lot more on the line. We decided take a look at the biggest, and occasionally wildest, adjusting the prices for inflation.
5. $140 billion – Pfizer buys Warner-Lambert
In 1999, long before it was a household name, Pfizer bought Warner-Lambert for $90 billion. In the late 1990s Warner-Lambert formed an alliance with Pfizer to bring its drug Lipitor to market. The drug did spectacularly and helped cement their relationship. This would eventually lead to the two companies getting hitched.
That is the rosy Wikipedia version of events at least. Wonder who wrote their page?
In fact, it was the end result of months of hostile exchanges between the two companies kicking off when Warner-Lambert announced that it was going to merge with AHP. This merger would make it the largest Pharma company in the world. Pfizer was having none of that and the very next day shot an unsolicited stock offer worth $80 billion to Warner. This would make it the largest hostile takeover of a pharma company ever.
Warner threatened Pfizer saying that it could jeopardise their agreement they had in place over Lipitor. Pfizer was getting somewhere between 40-50% of the profits made from the drug which was pulling nearly $4 billion in yearly revenue.
The pair squabbled both in private and in public letters. In one, Warner CEO Lodewijk de Vink said Pfizer’s actions do not agree “with the way we believe partners should treat one another.”
Pressure from shareholders and a range of other factors led to a thawing in their relationship. AHP received a $1.8 Billion break-up fee, the largest of all time. Warner-Lambert went on to receive $90 billion from Pfizer, up $10 billion from their initial offer.
4. $142 Billion – Dow Chemical Buys DuPont
In 2015, Dow Chemical spent $130 billion to pick up DuPont (i.e. du Pont de Nemours and Company) which at the time was the world’s fourth largest chemical company based on market capitalisation. The two had been courting each other since the early 2000s with successive CEOs. Finally it was Ed Breen, the CEO of DuPont, and then-CEO of Dow, Andrew Liveris, who pulled the trigger. By 2017, they had merged into DowDuPont. The new company had some heady days but was mired by mismanagement and slowly bled investors no matter what they did. Layoffs and asset sales across the board to tighten the belt couldn’t stopped its decline. In 2018, the company’s stocks dipped by 25% due to its agriculture sector hitting a slump due to bad weather and trade wars with China. Do you remember when everyone was freaking out about soybeans? Yeah, that.
In a bid to split the eggs into separate baskets, the complicated merger turned into a complicated spin-out in 2019 when the company became DuPont de Nemours, Dow Inc. and Corteva, Inc. This initially led to an overall devaluation across the board than if they were all together, but it’s yet to be seen if this was the right move or not.
3. $144 Billion – Verizon Buys Vodafone Group
Heading into 2013, Verizon picked up Vodafone Group’s 45 percent indirect interest in Verizon Wireless for $130 Billion. This finished a 14 year standoff between the pair to deciding whose side Verizon Wireless would land on. Eventually Verizon decided its window for taking the company for itself was closing with threats of rising interest rates. The deal was a highlight in the careers of Vittorio Colao and Lowell McAdam, the chief executives of Vodafone and Verizon. The pair discussed the third biggest sale in history using codewords, with the deal being dubbed Project River. Verizon was named after the Hudson in New York and Vodafone fittingly as the Thames. The deal was hammered home over exercycles and breakfast in a hotel in San Francisco.
2. $274 Billion – AOL Buys Time Warner
The new millennium had just been rung in and AOL started its purchase of Time Warner for $182 Billion. This made it the largest corporate merger in U.S. history. The fresh baby faced AOL was at its peak in the internet bubble. There was insane hype and an over-pumped valuation which made it easy for AOL to casually swoop in and buy the venerable media titan Time Warner. The idea was that these two companies would be bridging the gap between the TV and radiowaves of the past with the internet of the future. If these guys had done the merger in 2021, you know for sure they would have mentioned the metaverse.
A few months later the market would start correcting itself and the internet bubble burst, giving a massive hit to AOL Time Warner. Infighting broke out and knives were sharpened. Add to this AOL was still only providing dial-up connections while broadband was starting to sweep in. By 2002, AOL Time Warner reported a quarterly loss of $54 billion, the largest ever for a U.S. Company and board members were leaving like rats off a sinking ship. A few months later it was up to $98 billion in losses.
AOL was removed from the title and was later sold to Verizon in 2015 for $4.4 billion. Time Warner was also stripped for parts. This debacle would later be described as the worst merger in history.
1. $284 Billion – Vodafone Airtouch Plc Buys Mannesmann
Without inflation, the Vodafone acquisition of Mannesmann went for a whopping $183 billion in 1999. This has made it the largest business acquisition of all time.
The German company Mannesmann found itself in an interesting position during the Dotcom boom. It started life producing seamless steel tubes but was quickly pivoting to become a telecommunications provider under the leadership of the newly promoted Klaus Esser. It had controlling interests in Germany’s second-largest cell network D2, which was outperforming all its other segments, and it seemed like a no-brainer to follow the money. Before Esser could get very far with his plans of expanding into the UK with mobile operator Orange, the script got flipped on them. Vodafone Airtouch already had a 34.5% stake in Mannesmann, and rumours started to fly that Mannesmann was ripe for the picking. It started with a 100 billion euro offer that Esser flatly refused. He was then offered 125 billion euro, a record at the time. Esser still refused so Vodafone turned to Mannesmann’s shareholders to kick off a hostile takeover.
Esser made various statements to shareholders to try and turn the tide in his favour, pointing out they were looking at 30% growth through to 2003 with their new D2/Orange operation. But it was no use, the tide was against him. In February 2000, they shook hands and through gritted teeth Esser stated that he “saw that a majority of our shareholders felt joining up with Vodafone Airtouch would be the financially sound thing to do. So we did what all good management does, we went with the wishes of the majority and created this partnership”.
Don’t feel too bad for him though. The deal was somewhat sweetened for Esser when he was given a 30 million euro gift out of the deal. It ended in criminal proceedings for the generous gift giver Josef Ackermann for improperly enriching the managers of the Mannesmann. Esser was forced to pay a $1.5 million euro slap on the wrist, and charges of criminal breach of trust were dropped.
