The Worst Mergers and Acquisitions Deals of All Time

Academics argue that few mergers and acquisitions live up to their promise, with as many as 60% of deals failing to deliver strategic benefits or boost the value of the acquiring company's shares. However, some impressive examples of disastrous deals are worthy of note. Royal Bank of Scotland's ill-fated acquisition of Dutch rival ABN Amro in 2007 is often cited as one of the worst M&A deals in history, but it seems it may not hold the top spot. We've compiled a list of some of the most notable and damaging mergers and acquisitions that have left companies reeling and shareholders suffering.

Key Takeaways:

• The AOL-Time Warner deal in 2000 resulted in a whopping loss of $99bn, with a $45bn write-down on AOL. The deal is estimated to have destroyed 97% of shareholder value.
• Invensys' acquisition of Baan in 2000 cost the company £762m and led to a series of write-downs and profits warnings. Baan was eventually sold for a measly $130m.
• Taylor Woodrow's merger with Wimpey in 2007 resulted in a £5bn all-shares deal, but the timing was disastrous, coinciding with the UK housing market peak.
• HSBC's purchase of Household, a US sub-prime mortgage lender, in 2003 for $15bn led to write-downs of $17.2bn and a further $51m per day in loan losses.
• Quaker Oats' acquisition of Snapple in 1993 proved a disaster, with the company selling Snapple to Triarc for $300m, a mere fraction of the original purchase price of $1.7bn.
• BMW's purchase of Rover in 1994 for £800m likewise ended in failure, with the company selling Rover for £10 in May 2000.
• France Telecom's acquisition of Orange in 2000 for £45bn led to repeated price slashes and the company buying back all minority shares in 2003 for about £7.1bn.
• Daimler's purchase of Chrysler in 1998 for $36bn resulted in a lack of integration and a clash of cultures, leading to Chrysler's eventual demise.
• British Commonwealth Holdings' acquisition of Atlantic Computers in 1988 proved another exercise in futility, with both companies ultimately entering administration.

Statistics:

• AOL-Time Warner deal: $164bn initial purchase price, $99bn loss after just 2 years
• Invensys-Baan deal: £762m initial purchase price, £130m sale price
• Taylor Woodrow-Wimpey deal: £5bn all-shares deal, £4bn wiped off market value
• HSBC-Household deal: $15bn initial purchase price, $17.2bn write-downs
• Quaker Oats-Snapple deal: $1.7bn initial purchase price, $300m sale price
• BMW-Rover deal: £800m initial purchase price, £10 sale price
• France Telecom-Orange deal: £45bn initial purchase price, £7.1bn buyback price
• Daimler-Chrysler deal: $36bn initial purchase price, $7.4bn sale price

Sources:

• "The Worst Mergers and Acquisitions Deals of All Time" by Paul Guest and Scott Moeller
• "What Do We Do With Failed Mergers?" by Judge Business School, Cambridge University
• "Mergers and Acquisitions: A Study of the Ten Worst Deals" by Cass Business School
• "The AOL-Time Warner Deal: A Disaster for Shareholders" by The Guardian
• "Invensys Forks Out £762m for Baan" by The Financial Times
• "Taylor Woodrow Suffers £4bn Wipeout" by The Telegraph
• "HSBC Takes $51m Loan Losses a Day" by Bloomberg
• "BMW Sells Rover for £10" by BBC News
• "France Telecom Buys Back Orange Shares" by Reuters
• "Daimler Sells Chrysler for $7.4bn" by Automotive News