Five blockbuster business deals
On Aug. 15 2011, Google announced its purchase of cellphone maker Motorola, a clear signal of Google’s intentions to play hardball in the smartphone market.
The deal is worth $12.5 billion — not chump change, exactly, but a relatively modest sum compared to the truly blockbuster transactions.
Here’s a look at the five biggest business deals of the past 10 years.
Vodafone buys Mannesmann
Value of deal: $202.8 billion
Details: Mannesmann AG was a storied German company with over 130,000 employees and key holdings in the internet and telecommunications sectors, including the German cellular network carrier D2 Mannesmann. Vodafone PLC was, and remains, Britain’s largest phone company. What made Vodafone’s hostile takeover particularly contentious was that no large German company had ever been bought out by a foreign owner.
AOL merges with Time Warner
Value of deal: $181.6 billion
Details: American Online was one of the sweethearts of the early commercial internet, a service provider that evolved into a juggernaut of web content. As a result of the tech boom, AOL enjoyed incredible market capitalization, which was how it was able to partner with Time Warner, a more traditional media company and a juggernaut in its own right. The deal was initially touted as a watershed of media convergence — and has since been branded one of the worst mergers in business history. The bursting of the dot-com bubble severely devalued the AOL division, and in 2009 Time Warner spun off AOL into a separate, independent company.
Altria shareholders spin off Philip Morris
Value of deal: $113 billion
Details: Iconic tobacco manufacturer Philip Morris was incorporated in 1902 and by 2003 had expanded its business to include Kraft Foods and wine-making. That year, the company was renamed the Altria Group. In 2008, Altria shareholders, feeling that the tobacco business had become diluted, spun off Philip Morris International for $113 billion in order to restore the brand to its original mandate: making cigarettes.
RFS Holdings buys ABN Amro Holdings
Value of deal: $98.2 billion
Details: ABN AMRO Bank is a state-owned financial institution in Holland. Back in 2007, however, it was a private enterprise that caught the notice of a consortium going by the name of RFS – shorthand for the Royal Bank of Scotland Group, Dutch bank Fortis and Spain’s Banco Santander. RFS bought ABN AMRO in the biggest bank deal in history — and was then blindsided by the global financial crisis. Due to crushing debt, Fortis and ABN AMRO were nationalized in 2008.
AT&T merges with BellSouth
Value of deal: $89.4 billion
Details: Back in the early ‘80s, the U.S. government found AT&T to be in violation of competition laws and broke it up into eight smaller companies. AT&T spent the next few decades buying several of them back. This deal brought BellSouth — a so-called "Baby Bell" phone company — back under the AT&T umbrella, thus restoring AT&T’s distinction as the world’s largest telecommunications company.
At $12.5 billion, Google's acquisition of Motorola Mobility is not only the company's largest cash acquisition to date but also one of the largest business deals in the technology sector over the past decade. Among deals between technology companies, it ranks second only to Hewlett-Packard's $25 billion purchase of Compaq in 2001. Here are six others that rank among the biggest technology deals of the past 10 years.
- Oracle purchased business software company PeopleSoft for $10.3 billion in 2005 and Sun Microsystems for $7.4 billion in 2010.
- Microsoft acquired Luxembourg-based VoIP company Skype Communications for $8.5 billion in 2011, the largest acquisition in the software giant's history.
- Intel acquired anti-virus software company McAfee for $7.68 billion in 2011.
- Processor manufacturer AMD Inc. purchased Canadian graphics card company ATI Technologies Inc. for $5.4 billion in 2006.
- Cisco Systems acquired digital cable terminal manufacturer Scientific-Atlanta for $6.5 billion in 2006, the biggest acquisition of 140 Cisco has made in the past 20 years.
- A consortium of companies, including Sony, Microsoft, Apple, and RIM, purchased the patents of bankrupt Canadian telecommunications company Nortel Networks for $4.5 billion in 2011.