Newsmerger and acquisition activityMergers and Acquisitionsuk business

Top Money-Losing Business Acquisitions

Millions Down The Drain! What Were The Biggest Mistaken Mega-Deals?
Asa Bennett
|
Open Image Modal
handshake with map of the world ...
Shutterstock

Telecoms giant Vodafone's prospective £84 billion ($130 billion) of its stake in Verizone Wireless, set to be confirmed this afternoon, would mark the third biggest deal in corporate history.

Yet, with a look back, many corporate mergers and acquisitions in the past have failed to live up to expectations.

HuffPostUK takes a look back at the biggest "M&A" deals that have come to be seen as big money-losing mistakes.

Mistaken Mega-Mergers
Vodafone's Other Huge Takeover...(01 of04)
Open Image Modal
Vodafone took over Germany's Mannesman for $183 billion (then £112 billion). The telecoms giant would later find the 1999 deal, the largest of all time, would be much more expensive than thoguht.A year later, Vodafone had to write off some of the value of German fixed-line telephone firm Arcor, which it acquired as part of the deal as part of a £6 billion write-down of assets. Vodafone later had to write off £23.5 billion including the Mannesman deal after announcing record losses and hundreds of job cuts.
Philip Morris' $113bn Deal - Money Up In Smoke? (02 of04)
Open Image Modal
Tobacco manufacturer Philip Morris International (PMI) was spun off to shareholders by owner Altria in a 2008 deal at an estimated $113 billion. The move, designed to free up the firm to grow sales in emerging markets outside of the constraints of Philip Morris USA, PMI sells cigarettes in 180 countries and in 2012 had an estimated 16.3% of the total international cigarette market outside the US.However, in the second quarter of this year by over 8%.
RBS' £49 billion Dutch Disaster(03 of04)
Open Image Modal
Royal Bank of Scotland's disastrous deal to takeover Dutch bank ABN Ambro in 2007 for £49 billion caused so much damage that the consequences are still felt today.RBS' involvement in the transaction as part of a consortium with Fortis and Santander, just before the financial crisis hit, left the bank dangerously overexposed.The deal paved the way for RBS' collapse in November 2008, when it had to be bailed out with £45 billion from the taxpayer, leaving it now 80% state-owned. A report by the Financial Services Authority into RBS' collapse criticised chief executive Fred Goodwin for his decision over ABN Amro."The decision to make a bid of this scale on the basis of limited due diligence entailed a degree of risk-taking that can be reasonably criticised as a gamble," said the report.
Rupert Murdoch's Myspace Mistake(04 of04)
Open Image Modal
"We screwed up in every way possible," Rupert Murdoch later admitted in 2012 looking back on his ill-fated $580m buy-out of the Myspace social network in 2005. Murdoch snapped up the firm for $580 million and, he later admitted, "could have sold it for $6 billion a month later".However, the site was badly hit after Facebook launched and Murdoch sold it off for just $35m in 2011 - just 6% of what he originally paid for the business.

:

Suggest a correction
|
Submit a tip