Author: Gordon Platt

TRADING SIZE FOR VALUE

By Gordon Platt

Some of the biggest mergers in recent history—AOL and Time Warner, Vodafone and Mannesmann—show that such marriages aren't always made in heaven.

Dealmakers are now staring down a much smaller deal pipeline, however, the technology sector may prove to be M&A's savior.

All of the top 10 mergers worldwide took place between 2000 and 2008. They were far larger than the leveraged buyouts of the 1980s, which culminated in KKR's acquisition of RJR Nabisco in 1989 for a mere $31 billion. But many of these megamergers probably never should have been undertaken, judging by their poor outcomes.

The biggest takeover ever was the extremely hostile bid in 2000 by British mobile operator Vodafone AirTouch for Mannesmann of Germany to create the world's biggest mobile company. The $202.8 billion deal turned out to be a winner for Vodafone, as strong performance in Germany offset weakness in Southern Europe in recent years.This was the first time a large German company was taken over by a foreign suitor.

In the financial services industry, the 2007 acquisition and breakup of ABN Amro by Royal Bank of Scotland, Santander and Fortis was the biggest bank takeover in history at the time. The transaction, valued at $98.2 billion by Thomson Reuters, gave RBS and Fortis a debt hangover that depleted much of their capital and led to nationalization in the Netherlands and a bailout in the UK.

The $70 billion merger of Citicorp and Travelers Group in 1998 created the largest financial services company in the world at the time, a virtual financial supermarket. This brought investment and commercial banking under the same umbrella and spelled the end of the Glass-Steagall Act.

WORLD'S BIGGEST MERGERS

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