As 1999 draws to a close, the final price tag on corporate mergers and acquisitions has surpassed the $3 trillion mark. But not all of these transactions have contributed to shareholder value.
Mark N. Clemente and David S. Greenspan - M&A consultants and authors of the best-selling book, Winning at Mergers and Acquisitions - have identified the Top Ten Bloopers of the M&A world this year, indicating that even the biggest companies with the brightest minds and unlimited resources stumble along the way.
From Mr. Clemente and Mr. Greenspan, a summary of M&A's Top Ten Bloopers of 1999:
- AOL acquires Netscape. Shares in AOL are now back to the high reached just before announcing it's acquisition of Netscape. But AOL users still get the default browser as Internet Explorer, not Netscape's browser!
- @Home acquires Excite. Share prices are half of what they were when these two Internet companies merged.
- Disney acquires Infoseek. Disney moves from being an investor to an 100% owner, and key executives run for the hills, causing the stock to tumble.
- BNP acquires Bank Paribas. A hostile takeover opens the door and many key executives bail out.
- Tyco International goes on a shopping spree. Earnings and share prices have tumbled 40% amid accusations of fraud and questionable accounting practices.
- Deutsche Telekom's acquisition strategy in a vacuum. Telecomm giant Deutsche Telekom started in an acquisition frenzy -- but did so without conferring with its alliance partners, and now many of its acquisition targets are owned by its competitors.
- American Home Products attempted acquisition with Warner Lambert. AHP apparently can't close on any deal, with Warner Lambert being the "third time at bat" for AHP. Will the third time be the charm?
- Aetna US Healthcare bullying its partners. Aetna is looking to add resources to its base, but is alienating current customers and bullying potential acquisitions into submission. Stockholders don't like the practices and the share price has plummetted 40%.
- Auto Nation ignores economic cycle. Wayne Huizenga's Auto Nation, in an attempt to create cradle-to-grave srevices for car needs, has purchased a number of rental car companies, and has tried to unload a lot of the inventory as "pre-owned" cars. Pity the economy is too good -- consumers are looking for new cars or "great" used cars. 1800 employees will soon be laid off.
- BankOne neglects customer service integration. BankOne, on a shopping spree over the last few years, has failed to integrate key components of customer service and blending of cultures of its acquisitions. The result has been a hammering of the stock by 50%, making BankOne a takover candidate itself!