Following this week’s announcement that Amazon.com Inc has agreed to spend $8.45 billion on acquiring the Hollywood studio MGM holdings, the team at business formation providers ZenBusiness have delved into the archives to look into some of the most famous – and expensive – business acquisitions of the past.
The Most Expensive Business Acquisitions – Philip Morris Acquires Kraft Foods (1988)
- $13.1 billion ($29.6 billion)*
Cigarette and tobacco manufacturer Philip Morris purchased Kraft Foods in 1988, in what was (at the time) the second-largest merger in US history. A year later, Philip Morris combined the Kraft company with its other General Foods Corp.
This merger – named Kraft General Foods – was renamed again in 1995 to form Kraft Foods Inc.
Exxon Acquires Mobil (1998)
- $77.2 billion ($126.5 billion)*
The formation of ExxonMobil occurred in 1999 following the merger of major oil companies Exxon and Mobil. At the time of the deal, Exxon was the most significant energy company globally, while Mobil was the second-largest gas and oil company in the US.
ExxonMobil is now one of the world’s largest companies by revenue, generating more than $178.57 billion in 2020.
Pfizer Acquires Warner-Lambert (1999)
- $90 billion ($144.3 billion)*
At the end of 1999, the Pfizer-Warner Lambert acquisition brought together two of the fastest-growing companies in the pharmaceutical industry. At the time, the merger was worth $90bn, which is $144.3bn in today’s money.
As part of that merger, Pfizer acquired household brand names like Listerine and Wilkinson Sword.
Facebook Inc. Acquires WhatsApp Inc. (2014)
- $22 billion ($24.8 billion)*
In a deal worth $22bn (at the time), Facebook shocked the tech industry by acquiring WhatsApp’s instant messaging platform in 2014.
At the time, WhatsApp had more than 450 million users every month, as people looked to avoid text messaging charges.
Before WhatsApp, Facebook had acquired Instagram for $1bn and had been rumored to offer Snapchat $3bn for a similar deal.
Heinz Acquires Kraft (2015)
- $100 billion ($112.7 billion)*
The second time in this list – but this time as the company being acquired – is Kraft, which Heinz owners arranged in 2015. Once a public announcement revealing the news had been made, Kraft’s shares rose 17% in premarket trading.
Following the merger, the newly formed ‘Kraft Heinz Company’ instantly became the fifth-largest food and beverage company globally, with over $26 billion in annual sales as of 2020.
- $26.2 billion ($29.1 billion)*
Upon acquiring LinkedIn, many commented on how the $26 million purchase was a bold move for Microsoft and didn’t offer up enough opportunity to make significant returns on their substantial financial investments.
Fast forward almost five years, and LinkedIn continues to evolve with Microsoft at the helm. Reports from April this year state that overall sessions by users are up by 29% and that there has been a steady growth in ad sales on the platform.
The Walt Disney Company Acquires 21st Century Fox (2018)
- $71.3 billion ($75.8 billion)*
The recent media consolidation deal between Disney and Fox paved the way for the launch of the Disney+ streaming platform in 2019. It marked the first time in more than 30 years that a major movie studio has simply ceased to exist as an independent entity.
Disney, which already owned the Pixar, Marvel, and Star Wars brands before the deal, now also control the Fox-owned Marvel characters such as X-Men and The Fantastic Four. Other entertainment strands now owned by Disney include 20th Century Fox, The FX Network, The National Geographic Channel, Hulu, Fox News, and Fox Sports.
Acquisitions Tips For Small Business Owners
It doesn’t matter if you’re MGM or a micro-business; the decision to sell your company will be one of the hardest ones you ever make. And it can be even harder to know where to begin.
With so many different steps to take and hoops to jump through, it can be tempting to rush into things and make less-than-perfect business decisions.
JC Glancy at ZenBusiness explains five key things to keep in mind when prospective buyers start knocking on your door.
- Have clear goals and motivations and understand the implications of the sale
One of the first things to do when considering whether to sell your business is understanding the whole process from start to finish. Ensure you have done your homework and know the impact and what that might mean for your future, career, and finances.
Spend some time thinking about what your ideal buyer would look like. What values would you share? By setting those expectations from the beginning, you will have a clear understanding of the eventual outcome of the acquisition.
- Get your business in good order.
Acquisitions, by their nature, are long and complicated processes, no matter the size of your business. From financials through to company history, ensure you have all these documents to increase the likelihood of a smooth acquisition. An outstanding issue could rear its head and slow progress right down.
- Be open with your employees and team.
Your employees are why your company has been so successful, so ensure that you maintain an open and honest conversation with your team. This transparency will lead to a smoother process once the acquisition is finalized.
- Ensure your customers and clients are happy
Loyal clientele and customers are valuable to any acquirer; they prove that your business is viable and has longevity. Your customers must support you through the process and remain loyal long after the acquisition is complete.
*Inflation-adjusted for 2021, calculated via https://www.usinflationcalculator.com/