The Mergers and Acquisitions Larger than the GDP of 154 Countries
Apple and Google in the bottom ten for the least successful financial ventures in the past five years.
Online forex trading broker FXTM has analysed seventy of the biggest mergers and acquisitions in an index to discover which deals were worth more than some countries’ entire GDP.
The company has also examined the stock prices prior and post completion to identify which M&As were the most and least successful.
Out of the M&As included in the study, the top ten alone equated to over $980 billion in value:
The highest-value M&As occurred in 2014 and 2017. Both valued at $130 billion, they surpassed the GDP of 154 countries or, put another way, 72 percent of African nations and the entirety of Central America.
The first was when Verizon bought out Verizon Wireless Stake from Vodafone. The complex offer, which included cash and stock for Vodafone's 45 percent stake in Verizon, was the third-largest acquisition of any type in history and required the biggest corporate bond issuance on record.
The deal was worth the equivalent to the entirety of Angola’s GDP (and 153 other countries’ GDP). Its stock price 12 months on was approximately $48.97, a 519% increase from its first ever stock price of $7.90.
The second, also worth $130 billion, was the merger between Dow Chemical Company and DuPont in 2017 — which took many by surprise at the time.
The plan was to divide the combined chemical giant into three smaller companies, reducing research spend for both corporations. While continuingto this day, the merger paid off in the short-term, with the stock price reaching $69.72 a year after completion compared to $5.11 when it was first launched.
In terms of individual industries, pharmaceuticals and healthcare made up $215.5 billion (22 percent) of the top ten. Communications made up 294 billion (30 percent).
At $400 million, Shazam is one of Apple’s biggest acquisitions, emphasising the amount of investment the company is willing to put into the services that run on said hardware.
However, the deal is one of the smallest of those studied and pales in comparison to Apple’s $3 billion acquisition of Beats in 2014, which was to become the foundation of Apple Music.
This is perhaps down to the fact that music identification is not an exclusive feature that Apple can buy given the competition in the industry. It is also not an asset with clear potential to prevent users from switching to other brands.
Once completed, the stock price deal was $220.79. However, whether it has been worthwhile has yet to be seen as the acquisition only took place in September 2018.
While the acquisition is the smallest recorded, its GDP is still equivalent to Tonga and more than ten other countries, including the Cook Islands, the Marshall Islands and the Federated States of Micronesia.
In 2018, rumours swirled that Google would acquire troubled smartphone maker HTC as the release of the Pixel 2 approached. However, the deal eventually announced was much more limited in scope, with Google acquiring the majority of HTC's design team for only $1.1 billion. Worryingly, Google’s stock price decreased by $74.63 a year later.
The value of this deal was equivalent to the GDP of the Solomon Islands and more than 22 other countries, including several major Caribbean islands (Grenada, Saint Kitts and Nevis, Turks and Caicos, Montserrat, Dominica, Sint Maarten, Saint Vincent and the Grenadines, Anguilla and the British Virgin Islands).
Commenting on the latest data analysis, FXTM’s Head of Content Nikola Grozdanovic said:
“It’s been fascinating to analyse some of the world’s biggest mergers and acquisitions and visualise how their values compare to different countries’ GDP.
What is interesting to see is how successful these M&As have been and whether the stock prices now reflect the overall worth of each deal. There are also some unexpected names on the list, with Google and Apple making some of the lowest value acquisitions in recent times.”
The full results from FXTM’s latest study are available on its Mergers and Acquisitions Index.
Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.
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