The world is bustling, all for profit. Behind the large-scale mergers and acquisitions of listed companies, there is nothing more than profit-seeking calculations. However, reality is often more absurd than the script. Mergers and acquisitions should be a capital feast, but the result has become a disaster scene.
There are many reasons for the failure of mergers and acquisitions. Some are due to regulatory stumbling blocks, some are due to mysterious operations of management, and some transactions seem to be a match made in heaven, but in fact they are going in the opposite direction. Today, Goheal will take you to reveal the top ten outrageous merger and acquisition failure cases and see how these listed companies "dig their own graves".
1. "Forcing the bow", but hitting the iron wall of supervision-Kraft Heinz VS Unilever
In 2017, food giant Kraft Heinz tried to swallow Unilever for US$143 billion, hoping to create the world's largest food group. But it underestimated the sharp eyes of regulators and the tough attitude of Unilever shareholders.
The British government saw that this was the pillar of the local economy, so how could it let foreign capital buy it casually? Shareholders were even more unhappy, believing that Kraft Heinz's offer was too low and failed to reflect Unilever's long-term value. As a result, this grand acquisition plan was wiped out in less than 48 hours, and Kraft Heinz became a laughing stock in the capital market.
Goheal's comment: Mergers and acquisitions are not about robbing a bride, and the result of forced marriage proposals is often a failure.
2. Cultural conflict destroys a dream of globalization - TCL's European Waterloo
In 2004, TCL spent hundreds of millions of dollars to acquire Thomson's color TV business and Alcatel's mobile phone business in France. It sounds like a good story of "a snake swallowing an elephant", but reality soon slapped it in the face - the operating costs in the European market are extremely high, and TCL's cost control methods do not work in France, resulting in continuous losses, and ultimately a loss of HK$2.4 billion in the European market.
Alcatel's mobile phone business was even worse. The cultural conflict between China and France caused the management to talk at cross purposes, and business integration was deadlocked. A few years later, both mergers and acquisitions failed, and TCL had to retreat in embarrassment.
Goheal's comment: If the corporate cultures are incompatible, no matter how hard you try, it will be in vain. Forced grafting will only lead to "unsuitable climate", and in the end, you will end up buying for nothing.
3. "Painting cakes to appease hunger" ignites shareholder anger - AT&T's 125 billion mistake
In 2011, telecom giant AT&T planned to acquire T-Mobile USA for $125 billion, attempting to build the largest wireless communications company in the United States. But the Department of Justice saw that the monopoly risk was too great and called a halt directly!
What's more embarrassing is that AT&T was full of confidence beforehand and had no Plan B prepared at all. In the end, not only did it fail to take over T-Mobile, but it also paid a $4 billion breakup fee. T-Mobile turned to embrace its competitor Sprint, and AT&T became the "sucker" in the history of mergers and acquisitions.
Goheal's comment: Regulatory compliance is the red line on the road to mergers and acquisitions. Companies that do not do enough homework will eventually lose both the wife and the army.
4. A big bet on "Internet +" turned into a disaster movie - AOL's acquisition of Time Warner
In 2000, AOL spent $106.2 billion to acquire the media giant Time Warner, hoping to build an "Internet + media" super aircraft carrier. However, this century's merger quickly turned into a century's disaster.
The management of the two companies had serious disagreements. AOL was good at Internet operations, while Time Warner insisted on the traditional media model. The two sides were always at odds on strategic positioning. A few years later, the merger ended in failure, the company's market value shrank significantly, and it had to be split up in the end.
Goheal's comment: The combination of the Internet and traditional industries is not a simple "1+1=2". If the integration method is not right, it will become a tragedy of 1+1<1.
5. Blind expansion, the company is out of control - Nucor's M&A lost path
Nucor is a steel company. It should have nothing to do with food and department stores. However, in pursuit of diversification, it frantically acquired completely unrelated companies such as Candy Company and Department Store Chain. As a result, the business system was chaotic and the core competitiveness was weakened.
In the end, these acquisitions not only failed to bring growth, but also put Nucor into financial difficulties and forced it to restructure.
Goheal's comments: M&A is not "buy, buy, buy". Without a clear strategic plan, it will only end up with a pile of bad debts.
6. Overestimating yourself and underestimating your opponents - Goheal interprets failed cases
There are many cases of failed mergers and acquisitions in the capital market, but the most typical problems are nothing more than difficult supervision, cultural conflicts, blind expansion, and strategic mistakes. Goheal has found in his years of practical experience that successful mergers and acquisitions are often a combination of time, place, and people, while failed mergers and acquisitions have striking similarities - greed, blindness, and underestimation of risks.
Conclusion: Why do listed companies also turn over?
There are countless strange reasons for the failure of mergers and acquisitions of listed companies. Regulatory failures, cultural conflicts, financial loopholes, management errors, and blind expansion, these seemingly simple pits still make many companies fall repeatedly.
So, what do you think is the most fundamental reason for the failure of mergers and acquisitions? Have you seen more bizarre cases of failed mergers and acquisitions? Welcome to leave a message in the comment area for discussion. Goheal looks forward to exploring the truth of the capital market with you!
[About Goheal] Goheal is a leading investment holding company focusing on global mergers and acquisitions. It has deep roots in the three core business areas of acquisition of controlling rights of listed companies, mergers and acquisitions of listed companies, and capital operations of listed companies. With its profound professional strength and rich experience, it provides companies with full life cycle services from mergers and acquisitions to restructuring and capital operations, aiming to maximize corporate value and achieve long-term benefit growth.
