The good, bad, bizarre and unknown of Mergers and Acquisitions

This article was originally posted by Stephan Argent on the Argedia Group website. Stephan Argent is the CEO of Argedia Group and a member of the Marketing FIRST Forum, the global consulting collective co-founded by TrinityP3.

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So Apple just inked its acquisition of Beats Electronics for a whopping $3 billion.

Some argue the deal is pricey – even for Apple – given Beats headphones rail against Apple’s sleek design ethic. Others argue it gives Apple the opportunity to build a ready-made music subscription service, revitalising their music download business.

Time will tell whether the deal is good, bad, or bizarre for Apple to complete, but it got me thinking about mergers and acquisitions that have already made their marks on history in a variety of categories.

Here are my picks for the good, bad, bizarre and – like Apple’s acquisition of Beats – unknown:

Good

  • Exxon / Mobil:
    Exxon and Mobil signed their $81 billion agreement in 1999, and became the strongest leader in the oil market, posting a staggering $44 billion profit in 2012 – the second highest annual profit in US history.
  • Facebook / Instagram:
    Facebook’s acquisition of Instagram was an outstanding anticipation of the market and the importance of photo sharing in social media. Users have jumped from 30 million since the acquisition in 2012 to 200 million today.

Bad

  • United Airlines / Continental:
    By all accounts the 2010 $3 billion merger between United Airlines and Continental hasn’t gone according to plan. As if last quarter’s loss of $489 million wasn’t bad enough, the US Department of Transportation fined United $350,000 for taking too long to process refund requests which the airline then publicly blamed on the merger.
  • AOL / Time Warner:
    On paper at least, the $160 billion deal between AOL and Time Warner was a perfect match. But after old and new media cultures got to know each other, advertisers left in droves and the deal became known as one of the worst in history.

Bizarre

  • Engerizer / Playtex:
    Energizer acquired Playtex (feminine hygiene products) in 2007 for almost $2 billion. Bizarre? Well, a little. But the move enabled Energizer to diversify its consumer business and expand beyond North America. Perhaps not so strange when you consider Gillette purchased battery rival, Duracell for $7 billion in 1996.
  • Nestle / Jenny Craig:
    Food met a diet partner when Nestle paid some $600 million for Jenny Craig in 1996. Nestle later sold most of the company again in 2013 to North Castle Partners for “an undisclosed amount”, although likely for considerably less than the original purchase price.

Unknown

  • Google / Titan Aerospace:
    Google’s purchase of Titan Aerospace earlier this year could have any number of benefits for Google – not the least of which could be using drones to deliver internet access to anywhere on the planet, supporting its Project Loon initiative.
  • Delta Airlines / Phillips 66:
    Just when you thought the airline business couldn’t get any more risky and expensive, Delta bought itself an oil refinery in a move to help it manage fuel costs. While it worked initially, the refinery lost $41 million in the first quarter of 2014.

So when it comes to Apple and Beats – there’s a long list of successful, unsuccessful and bizarre mergers and acquisitions in recent memory. But for now, it must fall into the “unknown” category until Apple’s Beats hit the streets.

What innovative, brave or bizarre acquisitions or mergers have caught your attention?

About Stephan Argent

Stephan Argent is a former agency planner from England, and has held senior roles in agencies in both Canada and the United States. Most recently he was Vice President of Digital Media at CTV, and is now President of Le Riche Argent, Canada’s leading independent Agency Search and Media Management Consultancy.” Visit Le Riche Argent here

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