Worst Mergers or Acquisitions of all Time
With the year-end coming, there’s lots of talk about the good, the bad and the ugly aspects of not just the past year, but the first decade of the new millenium. Naturally, this talk then moves to which deal was THE worst in either 2009 or the period from 2000 to 2009.
I’ve certainly discussed this topic before. I’ve been quoted in national newspapers on the subject (see The Independent‘s article entitled ‘Was ABN the worst takeover deal ever?‘). It’s a difficult topic to avoid in academia (where I now sit) or amongst practitioners, whether active or retired, as I also am. Certainly at business schools, much of the discussion is about failed deals and what we can learn from them: in my own M&A course at Cass Business School, I include a number of case studies of failures (such as the classic of Quaker Oats’ acquisition of Snapple) or failures at consumating a deal (Sir Philip Green’s aborted attempt to take over Marks & Spencer, for example).
It was thus with great interest that I saw a survey of market participants recently in Here is the City entitled: And The Worst Bank Merger Of All Time Is…. The top ten in that survey of 30 are:
1. Royal Bank of Scotland / ABN Amro
2. Bank of America / Merrill Lynch
3. Citibank / Travellers Group
4. Credit Suisse / DLJ
5. Fortis / ABN Amro
6. Wachovia / Golden West
7. Commerzbank / Dresdner Bank
8. General Electric / Kidder Peabody
9. Allianz / Dresdner Bank
10. Midland Bank / Crocker
It should be noted that Here is the City is followed largely in London by bankers and often is the first source for many readers of industry news and gossip. Thus, the survey respondents — albeit 2,375 of them — are not a representative sample of anything other than a cross-section of such bankers. And the London base of the readership does bias the survey results to UK and European deals: I’m certain a more global survey wouldn’t have Midland / Crocker in the top ten and notice the lack of any Asian deals (shouldn’t Mitsubishi UFJ be in the top 30 somewhere?).
What is fascinating, I think, is that a ‘worst merger of all time’ list that extended beyond banking would still have many of these banking deals in the top ten. Certainly the ABN AMRO deal of 2007 must be in the top three (although I’m not sure whether to include this as one deal or three, as Here is the City did, with the RBS and Fortis purchases of ABN AMRO being considered failures but not Santander’s part of that deal). It may actually still be too early to determine if Bank of America’s purchase of Merrill Lynch is a failure (although it certainly looks that way and, if you use another criteria which is how long the CEO lasts after a major acquisition, then I’m sure Ken Lewis of BofA would think it a failure). Likewise, I wonder if Citigroup would be where it is is the Travellers deal hadn’t taken place … and therefore the impact of that acquisition may be coloured by recent events but not again the long term. Another consideration is certainly the opportunity costs: what would the acquirer have been able to do with the purchase money if they hadn’t done the deal and what would management have been able to be doing strategically if they hadn’t been distracted or fired (see our other blog on Surviving Mergers).
In any case, of the strategic (not financial sponsor) deals that must be included, I would suggest the following in rough order:
1. The Royal Bank of Scotland -led purchase of ABN AMRO
2. AOL / Time Warner
3. Daimler / Chrysler
4. Quaker Oats / Snapple
5. Invensys / Baan
Those five have to be in anyone’s list of the top 10, I’m sure. But others?
By-the-way, if you do want to see some discussion of financial sponsor (private equity firms, venture capitalists, hedge funds, etc) deals that failed, the Wall Street Journal blog Deal Journal has started a discussion on this here.
Intelligent Mergers 
That was really a worst time ever! thanks for sharing.
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