The world of holding companies and corporate acquisitions is, to say the least, murky. People make entire careers out of sorting through the legal and financial connections between companies in various industries – and sometimes they finish those careers just as confused as when they started. The emergence of multinational companies in the 20th century created a manic dash for the big corporate players to position themselves strategically in markets they wanted to do business in through corporate acquisitions. If you have the cash on hand, it’s much easier to buy out a company and acquire their assets and resources instead of trying to start a new venture to compete against and hopefully defeat said company in their market. Truthfully, it’s a good idea even if you don’t have cash on hand; there are dozens and dozens of banks all over the world capable of offering millions of dollars in credit to major corporations who have a proven track record, and if that fails there’s always the bond market or an IPO.
Mergers and acquisitions are just a cleaner and easier way to compete. It’s a big part of how the corporate network that runs our global economy functions. There is of course a major downside; as the bigger companies eat up the smaller ones, control of any given industry is further and further concentrated until it functions as an oligarchy – which more often than not is just a well disguised monopoly (think Canadian and American Internet and cable TV providers). The best way to combat this is through examining the corporate ownership web. More often than not, industries that seem competitive on the surface turn out to have only 2 or 3 players, who in turn own 10+ subsidiaries acting in their name. It’s a tangled mess, but one that’s worth researching. It may be a cheesy and redundant statement, but money is power. Following that money trail and seeing who lies at the end of it is one way to uncover the veil over that power and see who’s in the driver’s seat. So, without further ado, who owns whom? These are the 10 most expensive corporate acquisitions of all time.
#10 Sanofi Acquires Aventis – $73.5 Billion
In 2004, French pharmaceutical manufacturer Sanofi S.A. went by the name Sanofi- Synthélabo and was seeking to expand its share of the international pharmaceutical market. They were eager to acquire competitor and fellow French-based pharmaceutical company Aventis, but the board of Aventis had other ideas. A failed attempt at a €47.8 billion hostile takeover by Sanofi put Aventis on the defensive, and they began enacting ‘poison pill’ measures – essentially diluting the shares – in order to combat the hostile takeover bid. The French government intervened as a mediator, and shortly after both sides came to an agreement. Sanofi-Synthélabo and Aventis merged to form the new pharmaceutical multinational, Sanofi-Aventis.
#9 Comcast Acquires AT&T Broadband – $76.1 Billion
Two of the largest media providers in the United States came to an agreement in 2001. Comcast acquired AT&T Broadband for $76.1 billion, a deal that made Comcast the biggest cable provider in the United States in one fell swoop. AT&T Broadband was the cable television arm of AT&T, and Comcast knew that this acquisition would put a halt to any potential competition from AT&T in the cable television domain. AT&T, for their part, assumedly saw no future in their cable television business and decided to cash out in a big way. The AT&T Broadband acquisition – along with several other ones that followed over the next decade – were instrumental in making Comcast what it is today; the biggest mass media and communications provider on the planet.
#8 Royal Dutch Shell Acquires Shell Transport & Trading – $80.1 Billion
For those unfamiliar with corporate financial structure, this deal may seem somewhat bizarre. Yes, Royal Dutch Shell and Shell Transport & Trading were effectively under the same ownership prior to the deal. Both organizations were descended from the initial 1907 merger between the Royal Dutch Petroleum Company and Shell Transport & Trading. The catch is that, in 1907, nationalist sentiments in both England and the Netherlands were not conducive to a complete merger between the English and Dutch companies. As a result the two companies merged, but kept their business operations separate in order to placate their respective governments. Nearly a century later, in 2004, the business climate had changed dramatically. Royal Dutch Shell finally completely acquired Shell Transport & Trading in order to merge the business activities of both organizations under one umbrella, in a move that saw the left hand pay the right hand $80.1 billion.
#7 Exxon Acquires Mobil – $80.3 Billion
Undoubtedly you’re familiar with ExxonMobil, one of the biggest and most well-known oil companies in the world, so it may go without saying that it was formed from a merger between Exxon and Mobil, two very large oil companies. Interestingly, what most people don’t know is that both Exxon and Mobil, before merging in 1998, were cut from the same cloth. Both corporations were born in 1911 after the U.S. Supreme Court ruled that John D. Rockefellers’ Standard Oil Company was acting as a monopoly and ordered it to split up into 33 smaller companies in what was one of the largest antitrust rulings in history. 77 years later, 2 of those 33 companies had become Exxon and Mobil, respectively. Their merger created what is today the 3rd largest company, in any industry, in the entire world.
#6 SBC Acquires AT&T – $83.1 Billion
The $83.1 billion acquisition of AT&T by BellSouth is another example of antitrust courts being thwarted by the passing of time. In 1984, American courts ruled that AT&T had to break up into several subsidiaries to comply with antitrust laws. One of those subsidiaries was SouthWestern Bell, which became SBC Communications in 1995. In 2005, SBC Communications purchased its former parent company AT&T for $83.1 billion, effectively reunifying AT&T with its former subsidiary. SBC adopted the AT&T name, brand, and ticker symbol, which gave birth to the modern incarnation of AT&T, as we know it.
#5 Pfizer Acquires Warner-Lambert – $87.3 Billion
Pharmaceutical companies are keen on acquiring one another. Pfizer, one of the biggest pharmaceutical multinational companies in the world, acquired Warner-Lambert for $87.3 billion in 2000. Warner-Lambert was an American pharmaceutical company with a long history dating back to the mid-19th century, where it was originally founded as a simple retail pharmacy. Pfizer acquired Warner-Lambert as the first of many acquisitions in the 21st century.
#4 Fortis, Banco Santander, Royal Bank of Scotland Group Acquire ABN AMRO Holding – $100 Billion
This one is pretty messy. In 2007, Forits (one of the largest financial services providers in the world) teamed up with Banco Santander and the Royal Bank of Scotland Group to purchase ABN AMRO (a large Dutch bank). The 2008 financial crisis threw a wrench into the plans, and Fortis found itself unable to finance the acquisition. It sold off various assets and rebranded itself as Ageas in 2010, but the damage was already done. The unfortunate timing of the deal was the catalyst for the breakup of Fortis, and emphasized that timing is everything in mergers & acquisitions.
#3 Altria Group Spins Off Phillip Morris International – $107 Billion
Altria Group is a multinational corporation that, once upon a time, was named Phillip Morris Companies Inc. Altria rebranded in 2003, assumedly to distance its branding from its various tobacco holdings, and 4 years later sold off the international arm of Phillip Morris, Phillip Morris International. Altria remains in the tobacco business and owns Phillip Morris USA, among other tobacco companies, but sold off their international presence for a cool $107 billion in 2007.
#2 Vodafone Airtouch acquires Mannesmann – $185.1 Billion
The massive jump in price tag from #3 to #2 is emphasized by the $185.1 billion spent by Vodafone to acquire German competitor Mannesmann in 1999. Both companies were in the telecommunications business, but Mannesmann began operating in the UK, Vodafone’s domestic territory. Vodafone responded by launching a hostile takeover, one that was initially met with criticism from both Mannesmann and the German government. In 2000, Mannesmann agreed to the terms of the merger, and they became a part of Vodafone after EU approval. At the time it was the largest corporate merger in history.
#1 America Online Acquires Time Warner – $186.2 Billion
America Online (AOL) made waves in 2000 when it acquired Time Warner Cable for an astounding $186.2 billion. AOL was an Internet leader and Time Warner had a large portion of the cable television market, so on paper the merger should have created a mass media industry leader. In practice, the merger was disappointing and didn’t lead to the profits both groups had hoped for. In 2009, 9 years after the initial merger, both companies again went their separate ways when Time Warner spun off AOL. The $186.2 billion acquisition will undoubtedly go down as one of the biggest disappointments in corporate acquisition history, proving that buying out the competition isn’t always the quickest way to the financial promised land.