A hostile takeover is when a company’s share price is below its potential and another company buys them off either by approaching a company’s shareholders or by fighting to substitute the management. It mostly takes place in a publicly-traded firm. In this article, we will discuss the 5 most famous hostile takeovers in the history of mankind. Let us read about “5 examples Of Hostile Takeovers That Actually Worked”.
What Are The 5 examples Of Hostile Takeovers That Actually Worked?
Pharmaceutical, entertainment, telecom, bank, and software industries are what the most famous acquisitions took place. All the takeovers required billions of cash and bonuses allotted to the target company’s shareholders. We have talked about the kind of effort that the acquiring company invested in to get its hands on its target.
AOL And Time Warner
On the 10th of January, 2000, AOL acquired Time Warner for $182 million in stock and debt. Both companies were big names in the media industry. This takeover was also known as “The deal of the millennium” as it was one the most famous, and greatest takeovers in history. After the takeover, AOL shareholders owned 55% of the new company whereas Time Warner shareholders had 45% rights to the company.
Later, the Dot-com bubble popped resulting in a huge loss for AOL Time warner. Investors started selling off stocks making the company more vulnerable than ever.
Sanofi-Aventis And Genzyme Corp
Another example of a hostile takeover was when a French pharmaceutical company, Sanofi-Aventis took over an American pharmaceutical company called Genzyme Corporation in 2010.
One main reason for this takeover was that Sanofi-Aventis wanted to expand in the niche market, while during that time, Genzyme was developing drugs to treat rare genetic disorders. Sanofi-Aventis saw this as a golden opportunity to increase its wealth and the company’s reputation.
Sanofi-Aventis first tried to contact Genzyme’s management for a friendly takeover but they rejected the offer. Later, Sanofi-Aventis started convincing its major shareholders to support the acquisition. Soon they became successful and Genzyme cooperation came into their hands. The cash offer made was $20.1 billion, while the other bonus payments made to the shareholders were around $3.6 billion.
Oracle And PeopleSoft
Oracle, also known as one of the largest sellers of business application software, acquired PeopleSoft in 2004. The takeover was followed after months of negotiation on the share price, from $16 to $26.5, it was finally accepted by PeopleSoft management and the shareholders. After acquiring, Oracle laid off 50% of PeopleSoft employees. The deal was finalized for approximately $10.3 billion.
Vodafone AirTouch And Mannesmann AG
One of the largest mergers in history took place when Vodafone AirTouch acquires Mannesmann AG in 2000. Mannesmann AG was a German telecom company that fought for months against Vodafone takeover bids, but finally, for a $190 billion deal, it got sold off. It made Vodafone the world’s fourth-largest publicly traded company. It was said that the acquisition was made possible, because of the hand sum amount of bonuses that were made by Vodafone, to Mannesmann’s shareholders. Nevertheless, the acquisition was one of the most successful mergers of all time.
RBS And ABN AMRO
The biggest bank takeover in the history of Europe took place when RBS, Royal Bank of Scotland, took over the Dutch Bank, ABN for $98.5 billion. However, during the financial crisis of 2007, RBS regretted taking over as it was out of capital, and the government had to save it from collapse. This later resulted in the government owning 60% of the bank.
Now we have learnt “5 examples Of Hostile Takeovers That Actually Worked”, These were the famous mergers that took place. All these takeovers required a lot of money and negotiations that brought the success they later had. A few of the mergers were an outcome of a wise decision of the management; however, some of the firms later regretted the acquisition.
How can a Company resist a takeover?
There are a lot of ways through which a company can avert the takeover. Some of them involve prior planning; Establishing stock securities that have different voting rights can limit the control of the shareholders. The company can also come up with an ESOP that will provide employees with the ownership of the firm.
How to make a takeover less attractive?
By introducing a few provisions, a company can make the hostile unattractive. One of the ways is by making a provision of selling the firm’s most valuable asset if a hostile takeover takes place. This is also called a Crown Jewel defense.
Does a takeover impact share price?
Yes, the firm that gets acquired experiences a change in share price after the merger. Normally, the share price sees an increase, making it look good for the target company’s shareholders. The reason why the share price sees a boom is that when a company wants to take over another company, it is aware of the fact that the target company is not fully maximizing the shareholders’ value, thus, they provide a way to do so through mergers.