On June 12, 2018, media giants AT&T and Time Warner were given legal clearance — without conditions — to complete an $85.4 billion merger. Just days later, AT&T announced the deal was done, cementing the acquisition of Time Warner as one of the biggest in history.
Since this groundbreaking acquisition last week, another newsmaking merger has already taken place. It was announced on June 20, 2018, that Walt Disney Corp. would be acquiring 21st Century Fox for $73.1 billion in cash and stock after battling Comcast for the deal.
For most companies, the main reasons for a merger lie in boosting one’s own strengths as a business by utilizing the skills and assets of another company.
But how much would it take to compete with some of the top deals of all time?
5. AT&T and Time Warner — $85.4B
On June 14, 2018, AT&T and Time Warner’s merger swept in to claim a spot among some of the most expensive deals ever made. AT&T acquired Time Warner and all of its assets for $85.4 billion, topping a similar deal between Exxon and Mobil back in 1999. Almost 20 years ago, the No. 1 and No. 2 oil powerhouses completed an $81 billion merger after two years of delays due to antitrust concerns and investigations.
A lawsuit filed by the Justice Department in November 2017 put a hold on the Time Warner acquisition that was announced back in October 2016. The antitrust division of the Justice Department attempted to halt negotiations, arguing that the merger would harm industry competition and innovation and raise prices for consumers. The government’s burden of proof to block the move was insufficient, and Judge Richard Leon ruled in favor of AT&T.
AT&T hopes acquiring Time Warner’s entertainment divisions will help it compete against other tech giants like Netflix and Amazon who are investing heavily in content and original programming. Its takeover of HBO as part of Time Warner will be key to making that happen. John Stankey, the new head of AT&T’s entertainment division, wants to boost HBO’s original-programming budget and expand the online-only version of HBO to other countries to better capitalize on the worldwide enthusiasm for the network’s premium content, according to Fortune.
4. AT&T and BellSouth — $86B
Over a decade before AT&T and Time Warner penned their deal, AT&T spent $86 billion to acquire BellSouth in 2006. At its core, AT&T is a telecom company and the merge with BellSouth allowed it to expand further into America’s rural markets, which were sorely lacking in mobile coverage in the early 2000s.
The merger also allowed AT&T to bundle cell services, TV and internet in an effort to gain new customers and improve retention, according to Yahoo Finance.
3. Pfizer and Warner-Lambert — $90B
In 2000, pharmaceutical big shot Pfizer Inc. purchased Warner-Lambert Co. for $90 billion. The move was largely influenced by Warner-Lambert’s 1999 suit to end its licensing pact with Pfizer for the cholesterol drug Lipitor. Warner-Lambert was originally set to be acquired by American Home Products, but the company walked away with $1.8 billion in breakup fees instead, leaving the door open for Pfizer to settle the lawsuit and gain full control of Lipitor’s profits in one fell swoop.
The merger turned out to be worth every penny. Lipitor alone raked in over $12 billion annually for Pfizer at the height of its profitability between 2005 and 2008; however, after a patent loss at the end of 2011, annual profits for Lipitor declined to just under $2 billion by 2017.
2. America Online and Time Warner — $164B
AT&T’s acquisition of Time Warner isn’t the first time this American staple has been bought. Also in 2000, early internet darling America Online purchased Time Warner for $164 billion in one of the most expensive mergers of all time. Because most of America was still using landlines to connect at the time, the merger seemed like a given. The deal only lasted nine years, however, before AOL’s post-dial-up deterioration prompted Time Warner to become independent once more in December 2009.
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1. Vodafone and Mannesmann — $181B
The year 2000 should be known as the year of huge mergers. At the turn of the millennium, U.K.-based Vodafone AirTouch PLC — Vodafone Group Plc today — paid just shy of $181 billion to acquire German company Mannesmann.
But like with America Online and Time Warner, expensive doesn’t always mean successful. Vodafone’s original offer was rejected, so it nearly doubled the offer to push the deal through, according to Business Insider. But Vodafone ended up writing off tens of billions of dollars in the next few years as a result.
If you’re looking for an investment and don’t want a bust like some of these mergers, these 10 stocks could be the next big thing.
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