Mergers and acquisitions happen regularly in the business world. Companies are looking to expand their business and gain new assets as well as new customers.
However, it also happens that mergers are unsuccessful and lead to sad consequences for the company.
Here are some of the most failed mergers and acquisitions in the business world.
Bayer/Monsanto
In June 2018, the German chemical concern Bayer completed the takeover of the American agrochemical corporation Monsanto.
Bayer is now the sole owner of Monsanto.
“This is a great day for customers – farmers around the world with our help will be able to grow and preserve their crops even better, for shareholders – this transaction creates significant added value, for consumers and the global community, because we will try to provide them with even more healthy, affordable and renewable products,” said Werner Baumann, Chairman of the Board of Directors of Bayer.
Monsanto shareholders received $128 for each share of the company. The cost of the largest merger in the history of the agro-industrial industry was $63.5 billion.
The two-year process resulted in the creation of the world’s largest producer of genetically modified seeds, as well as pesticides and herbicides.
Nevertheless, the purchase of Monsanto brought a lot of problems to the German concern, as lawsuits are regularly brought against the “most hated company in the world”.
Following the takeover of Monsanto by Bayer in 2018, litigation and associated reputational damage has become a serious problem for the German company.
Monsanto’s products have been the subject of increasing litigation in recent years, with more than 13,000 lawsuits filed in the United States alleging cancer in people who used Roundup herbicide.
In particular, in May of this year, a jury in Alameda County in California delivered a verdict in favor of Elva and Alberta Pilliod, who accused Monsanto of failing to warn consumers about the risks of cancer when using this product in agriculture.
The jury ordered Monsanto to pay a $2 billion fine and $55 million in damages to spouses who accused the company of using its products to develop lymphoma.
Lawyers representing the Pilliod couple said the court’s decision was “historic”.
This is the third lawsuit that resulted in the approval of claims against Monsanto in California. In August 2018, gardener Dwayne Johnson won a case against Monsanto with similar allegations of causing cancer due to the use of Roundup.
The jury initially awarded him $289 million in damages, which was subsequently reduced to $200 million.
In March 2019, under similar charges, California resident Edwin Hardeman’s lawsuit was approved: he was awarded compensation in the amount of $80 million. In April of this year, farmer Paul Francois won a lawsuit against Monsanto in France.
The concern reacted to the decision on the approved $2 billion lawsuit, saying it was “disappointed” with the decision and intended to appeal. Bayer said the herbicide Roundup was safe and that the Pilliods allegedly “had diseases that are significant risk factors for non-Hodgkin’s lymphoma.”
Bayer shares on the Frankfurt Stock Exchange after the approval of another lawsuit against Monsanto on May 14 fell by 2.2%, being among the “anti-leaders” among large companies in Germany, whose quotes showed a negative trend on Tuesday against the back of a 1% increase in the DAX 30 index.
The net profit of the German chemical and pharmaceutical concern Bayer AG in the first half of 2019 decreased by 1.7 times compared to the same period last year to 1.645 billion euros, according to the company’s financial statements.
The company’s net profit for the II quarter amounted to 404 million euros and decreased by 2 times compared to the same period a year earlier. Earnings per share fell to 0.41 euros from 0.87 euros a year earlier. Revenue grew by 21.1% to 11.485 billion euros.
HP/Autonomy
In the middle of August, 2011 the HP company completed purchase of the British company Autonomy.
Autonomy was engaged in the development of applications for the corporate sector and the provision of cloud computing services. Many experts noted that HP was buying Autonomy “at an overpriced price”: at a share price of $42.11 per share, the acquisition of the company came out in an impressive amount of about $10 billion.
According to HP, the company has agreed with shareholders of Autonomy to buy more than 213 million shares at a price of $39.54 per share. In total, HP acquired about 87.34% of the company’s shares, and it cost it $ 8.438 billion at the current rate of the British pound sterling.
However, already in 2012, HP wrote off $8.8 billion, saying that Autonomy’s management “had resorted to serious accounting misstatements” to inflate the company’s value. HP also contacted the US Securities and Exchange Commission’s Division of Compliance, which resulted in civil and criminal investigations.
In 2014, an attempt was made to reach an agreement with the shareholders, but the court rejected HP’s proposal.
In 2015, HP and Autonomy are suing each other. In June 2015, a court ruled that HP was required to pay Autonomy $100 million as part of the lawsuit. According to the court order, HP management was aware of the accounting department of the British company before the start of the merger process.
In September 2016, HP begins a partial spin-off of Autonomy, selling off part of the company’s assets.
Microsoft/Nokia
In 2013, Microsoft CEO Steve Ballmer saw an opportunity in the acquisition of Nokia, a Finnish mobile phone maker.
The transaction was completed in 2014, but this acquisition quickly proved to be ineffective.
Ballmer left Microsoft in the same year, and the new head of the company, Satya Nadella, was forced to make serious efforts to restructure the company, including laying off nearly 15,000 employees.
Microsoft wasted $8 billion on the Nokia experiment.
Daimler/Chrysler
The merger of two famous brands in the automotive industry in 1998 seemed like a great idea.
Daimler was betting heavily on this merger, paying $36 billion to merge with Chrysler. However, other people came to the management, which created many problems for the combined company.
As a result of the retirement of the head of Chrysler Bob Eaton, the main control powers were transferred to Daimler. Soon, however, other senior Chrysler directors, including the president and vice chairman of the board, were forced to leave.
All control over the company passed to Daimler, after which the company began to invest heavily in Chrysler. However, language and cultural differences meant that new Chrysler product launches led to failures, resulting in the company losing market share.
The recession and falling sales led to the collapse of this budding alliance. In 2007, Daimler sold an 80% stake in Chrysler to Cerberus Capital Management for $7 billion.
New York Central/Pennsylvania Railroad
Pennsylvania and the New York Central Railroad were powerful titans in their field of business, going back to the 19th century.
Despite their rivalry, in 1962 they filed for influence, which would have resulted in the single company becoming the sixth largest corporation in America.
By the time the deal was approved in 1968, the very trends in travel had changed. People began to use not rail transport more often, but high-speed routes, airplanes.
In addition, tough legislation also played a role. All this led to the collapse of the new company, the value of which reached $4.6 billion. Two years later, the new company declared bankruptcy.
AOL/Time Warner
The $164 billion deal to merge Time Warner and AOL combined old and new companies into a potentially powerful new company.
Behind the scenes, however, the situation was not so promising. The dot-com bubble burst, cultural differences prevented cooperation, the market situation changed.
In 2003, the new company announced a write-down of $45 billion in assets and then a loss of $100 billion.
Sprint/Nextel
These companies called the deal a “merger of equals.” They catered to different user bases, Nextel catered more to businesses while Sprint was aimed at private customers.
Unfortunately, the benefits of this deal never materialized.
It was difficult for companies to integrate into a single corporation, and Nextel executives left the company almost immediately after the merger.