What Are The 5 examples Of Hostile Takeovers That Actually Worked?

Pharmaceutical, entertainment, telecom, bank, and software industries are what the most famous acquisitions took place. All the takeovers required billions of cash and bonuses allotted to the target company’s shareholders. We have talked about the kind of effort that the acquiring company invested in to get its hands on its target.

AOL And Time Warner

On the 10th of January, 2000, AOL acquired Time Warner for $182 million in stock and debt. Both companies were big names in the media industry. This takeover was also known as “The deal of the millennium” as it was one the most famous, and greatest takeovers in history. After the takeover, AOL shareholders owned 55% of the new company whereas Time Warner shareholders had 45% rights to the company. 

Later, the Dot-com bubble popped resulting in a huge loss for AOL Time warner. Investors started selling off stocks making the company more vulnerable than ever.     

Sanofi-Aventis And Genzyme Corp

Another example of a hostile takeover was when a French pharmaceutical company, Sanofi-Aventis took over an American pharmaceutical company called Genzyme Corporation in 2010. 

One main reason for this takeover was that Sanofi-Aventis wanted to expand in the niche market, while during that time, Genzyme was developing drugs to treat rare genetic disorders. Sanofi-Aventis saw this as a golden opportunity to increase its wealth and the company’s reputation.

Sanofi-Aventis first tried to contact Genzyme’s management for a friendly takeover but they rejected the offer. Later, Sanofi-Aventis started convincing its major shareholders to support the acquisition. Soon they became successful and Genzyme cooperation came into their hands. The cash offer made was $20.1 billion, while the other bonus payments made to the shareholders were around $3.6 billion.

Oracle And PeopleSoft

Oracle, also known as one of the largest sellers of business application software, acquired PeopleSoft in 2004. The takeover was followed after months of negotiation on the share price, from $16 to $26.5, it was finally accepted by PeopleSoft management and the shareholders. After acquiring, Oracle laid off 50% of PeopleSoft employees. The deal was finalized for approximately $10.3 billion. 

Vodafone AirTouch And Mannesmann AG

One of the largest mergers in history took place when Vodafone AirTouch acquires Mannesmann AG in 2000. Mannesmann AG was a German telecom company that fought for months against Vodafone takeover bids, but finally, for a $190 billion deal, it got sold off. It made Vodafone the world’s fourth-largest publicly traded company. It was said that the acquisition was made possible, because of the hand sum amount of bonuses that were made by Vodafone, to Mannesmann’s shareholders. Nevertheless, the acquisition was one of the most successful mergers of all time.

RBS And ABN AMRO

The biggest bank takeover in the history of Europe took place when RBS, Royal Bank of Scotland, took over the Dutch Bank, ABN for $98.5 billion. However, during the financial crisis of 2007, RBS regretted taking over as it was out of capital, and the government had to save it from collapse. This later resulted in the government owning 60% of the bank. 

Bottom Line

Now we have learnt “5 examples Of Hostile Takeovers That Actually Worked”, These were the famous mergers that took place. All these takeovers required a lot of money and negotiations that brought the success they later had. A few of the mergers were an outcome of a wise decision of the management; however, some of the firms later regretted the acquisition. 

How can a Company resist a takeover?

There are a lot of ways through which a company can avert the takeover. Some of them involve prior planning; Establishing stock securities that have different voting rights can limit the control of the shareholders. The company can also come up with an ESOP that will provide employees with the ownership of the firm.

How to make a takeover less attractive?

By introducing a few provisions, a company can make the hostile unattractive. One of the ways is by making a provision of selling the firm’s most valuable asset if a hostile takeover takes place. This is also called a Crown Jewel defense. 

Does a takeover impact share price?

Yes, the firm that gets acquired experiences a change in share price after the merger. Normally, the share price sees an increase, making it look good for the target company’s shareholders. The reason why the share price sees a boom is that when a company wants to take over another company, it is aware of the fact that the target company is not fully maximizing the shareholders’ value, thus, they provide a way to do so through mergers.

title: “5 Examples Of Hostile Takeovers That Actually Worked” ShowToc: true date: “2022-12-20” author: “Sheri Pon”

5 Examples Of Hostile Takeovers

The most common way for a hostile takeover to occur is through a tender offer where a bidder offers a shareholder a premium on the stock price. If a majority of the voting shareholders agree, then the company’s board and employees are left with no choice.   

1. Oracle and Peoplesoft

In June of 2003, PeopleSoft announced a merger with J.D. Edwards. At full tilt with the news breaking out, Oracle hatched a hostile takeover venture of PeopleSoft.  Oracle’s bid brought with them a boundlessly grueling interrogation for the board of PeopleSoft, inquiries regarding whether PeopleSoft products would resume being supported and clients became hesitant to invest in the software. Consequently, managers were challenged with a verdict on how to counter the bid and the precariousness it caused. Henceforth, the Board had to contemplate the innuendos of a Customer Assurance Program for the prosperity of the business, its clients, and its obligations towards the shareholders all while tackling a tender offer.

2. Kraft Food and Cadbury

Back in 2010, the Chairman of Cadbury, Roger Carr, received a proposition worth $16.3 billion (740 pence) against his shares from Irene Rosenfield, the CEO of Kraft Food Industries Inc. The initial offer was outright rejected. Kraft proposed another bid shortly, for £10.1 billion ($17 billion). The offer was rejected on the grounds of being undervalued. Nelson Peltz, founder of Trian Fund Management, who until then retained shares in Cadbury after confabulations and arbitration with Kraft eventually pushed Cadbury to mislay its proprietorship in January 2010. Kraft ultimately succeeded in taking over Cadbury in a belligerent bid of $19.5 billion.

3. Sanofi Genzyme

Following the rancorous takeover clash in 2004, Aventis, the French Pharmaceutical distributor, concurred to being taken over by a small-scale competitor Sanofi-Synthelab. The deal was carried in cash and via stocks estimated at $65 billion. Back in the day, the integration gave rise to the world’s third-largest drug maker with a market valuation of no less than £90 billion preceded by Pfizer and GlaxoSmithKline. While that was under the rags, there was pressure on Sanofi-Synthelabo from the French govt. to increase foreseeing Aventis’ acceptance of a renewed offer.

4. InBev & Anheuser

With the summer sun setting in the US, an unforeseen bid to takeover Anheuser-Busch Co. was made by a Belgian-Brazillian brewer Inbev. The initial proposal of $65/share was refused by the board of Anheuser, citing undervaluation of its shares after anticipating that a better offer was unlikely, the Anheuser board voted to accept the deal of $70/share by the month of July. The $70 price, which was accepted in 2008, constituted a sizeable premium for the German shareholders.

5. Air Products and Airgas

In 2010, Air Products, the largest supplier of Hydrogen and Helium gas, sought to acquire Airgas, a domestic supplier, and distributor of medical and special gases. At the time Air Products owned a large amount of common stock in Airgas. In furtherance of its goal, Air Products proposed a $60 per share, all cash, structurally non-coercive, hostile tender offer which Airgas’ board rejected. Following the rejection, Air Products nominated 3 of its own independent directors ahead of Airgas’ Annual Meeting, resulting in a proxy contest between the two. Airgas used a poison pill to defend against Air Products’ hostile takeover bid.

In the following month, Air Products raised its offer to $65.50 per share but the board unanimously rejected it again. Finally, at the 2010 Annual Meeting, Airgas shareholders elected all 3 of Air Products’ director nominees to the board. Air Products then made a final offer of $70 per share which Airgas’ board rejected. Despite the board’s opinion, a majority of its shareholders wanted to approve the takeover and tender their shares. Subsequently, they sued the Board in the Delaware Court of Chancery, requiring Airgas to remove the poison pill.  

Today, hostile takeovers are rare due to stronger antitakeover laws adopted by many states. New federal laws also require more notice and fuller disclosures in proxy solicitations. However, hostile takeovers are not gone. The same management hubris that we saw in the past may launch future takeovers. Investors looking for extraordinary returns will continue to fund hostile takeovers. Finally, the global economy will witness cycles of growth and decline that will create new opportunities for hostile takeovers domestically and abroad. The global economy will create corporate losers and winners, opening doors to opportunists.