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Tuesday, July 8, 2014

Examples of successful mergers and acquisitions

Model merger and acquisitions
Businesses seek to merge with, or acquire other businesses for strategic reasons

Successful mergers and acquisitions should lead to organizations that have more influence, spending power, and technology than the companies that existed before a deal. Here are a few examples of successful mergers and acquisitions that have changed the economy and the way people live.

The Sirius - XM merger


Sirius and XM fought to control the satellite radio market during the 2000s. In 2007, they decided to join forces so they could give customers more entertainment options (and, let's be honest, eliminate their biggest competitors so that they had total domination over satellite radio).

The merger ran into a big problem when the FCC informed the companies that their licenses would not allow them to become one company. After a year of filing paperwork and waiting, the two companies were given a barrier that almost forced them to back out of their agreement.

It took more time for Sirius and XM to get approval, but eventually the FCC conceded. Although Sirius XM is a relatively new company, it has given more options to subscribers. That makes it a success story, at least for now.

The Disney - Pixar merger

Entertainment industry mergers
The Disney-Pixar merger resulted in many animated films
Few mergers have brought more joy to the world than that of Disney and Pixar.

Before the merger, Disney had worked as Pixar's distributor. Pixar made the movies and Disney made sure that they got into the hands of children and adults all over the world.

As the distribution contract reached an end, though, neither Disney nor Pixar wanted to part ways. Then again, both companies saw that they could benefit by working together instead of separately. This lead to an torrent of animated movies including:
  • WALL-E
  • Up
  • Bolt
After the merger, Pixar found that it had enough workers and money to release two movies a year. That was unthinkable without Disney's help. Anyone who adores Pixar movies has to see this merger as a great success.

The Exxon - Mobil merger


Until 1999, Exxon and Mobil operated as two completely separate oil companies. In 1999, though, they joined forces to produce one of the biggest mergers in history. The $81 billion agreement gave Exxon-Mobil unprecedented reach in the fossil fuels market. The agreement was so big that the FTC demanded a restructuring of gas stations owned by the companies. Without that restructuring, the FTC worried the merged company would constitute a monopoly.

Oil and gas industry mergers and acquisition
The Exxon-Mobil merger allowed more access to fossil fuels
How successful was the merger? Consider that in 2008, the company earned over $11 billion in one quarter. Not the full year; just one quarter!

Today, it's the second largest publicly held company in the world. Only Wal-Mart is larger. Anyone looking at the numbers has to admit that this is an extremely successful merger.

Mergers and acquisitions don't always work. Some companies have differing philosophies that make it impossible for them to join forces, even when doing so would benefit them. These examples, however, show that some mergers and acquisitions can work quite well. Corporate lawyers plays a vital part during these mergers and acquisitions. They are the ones who take care of all the paper works and looks for the possibilities under the law which favors these deals.

Images: Shutterstock; royalty free license

2 comments:

  1. Regarding Exxon Mobil: in the 3rd paragraph, Apple is the only publicly-held firm that's larger (not Wal-Mart).

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    1. Perhaps the author meant largest by revenue rather than capitalization?

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