June 21, 2018

Top 5 Biggest Corporate Mergers in History

Royal Dutch Petroleum and Shell Transport & Trading Co. – $95B

Royal Dutch Petroleum and Shell Transport

In 2004, Royal Dutch Shell merged its two companies, ending a 100-year division between the Anglo and Dutch properties. Both companies were enjoying an increase in profit, but a drop in stock price due to Shell overstating their oil reserves. The combination of the two entities was intended to resolve this issue by allowing for more company-to-consumer transparency through assigning a single company name and CEO across country borders. Considering that the company now boasts over $411 billion in assets, it seems this merger worked exactly as intended.

Heinz and Kraft – $101B

Heinz and Kraft

Heinz and Kraft combined their companies to form the Kraft Heinz company in 2015, making them the fifth largest food company in the world, and the third largest in the United States. Boasting an annual revenue of $28 billion, as well as an increase in stock value (stock for Kraft was valued at $61 a share previous to the merger, and Kraft Heinz is now $77 a share). The $101 billion price tag seems reasonable in the long run, especially considering it was viewed as a bad move and was valued at less than half of that at the time.

Glaxo Wellcome and SmithKline Beecham – $106B

Glaxo Wellcome and SmithKline Beecham

Glaxo Wellcome and SmithKline Beecham became unified as Glaxo SmithKline in 2000, making them the largest pharmaceutical company in the world. Both companies had roots in the UK, and the idea was to expand their worldwide influence with the merger. Interestingly enough, both companies were the products of previous mergers but sought a further unification to gain a global edge, as many other pharmaceutical companies were considering mergers of their own at the time, and created over 15,000 jobs tied to pharmaceutical research.

AT&T and Time Warner – $109B

AT&T and Time Warner

At the time this article is being written, AT&T and Time Warner are still currently embroiled in a legal battle to complete their merger, which has been blocked by the US government despite the merger originally being announced over a year ago. The Department of Justice currently posits that the merger would give the companies too much of a market advantage. They have until April 22, 2018, to finalize the merger, or AT&T will have to pay Time Warner an additional $500 million for time and expenses, in addition to the agreed upon price of the merger itself.

RFS Holdings and ABN Amro – $113B

RFS Holdings and ABN Amro

These two European banks announced a merger in 2008 to avoid succumbing to a financial crisis. However the RFS Holdings side of the arrangement (consisting of Royal Bank of Scotland, Fortis and Banco Santander) had depleted its reserves in the process. It was harmed further in 2008 as Bernie Madoff’s famous fraudulence cost them over a billion euros in lost investments. The merger wasn’t announced as complete until 2010, at which point Fortis was all that remained of RFS, and is widely considered as one of the most poorly timed mergers in history.

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