Archive for January 2nd, 2010

Symmetry of M&A in the last Decade (2000-2009)

Posted on Saturday, 2 January 2010. Filed under: Business History, Commentary, Mergers |

The first decade of the new millennium is over.  Happy New Year everyone!  So along with so many other observers of the financial markets, I would like to comment on the past ten years.  Some of these comments have appeared elsewhere – and in fact from me as a number of publications have asked me about my thoughts on M&A in the ‘Noughties’ (including the Financial Times, Financial News, Reuters and Bloomberg).

Most telling I think is how much HASN’T changed:  I like the symmetry of the AOL / Time Warner deal:  10 days into the new year in 2000 the deal was announced and only 9 days into the last month of the decade the deal was unwound.

The new millennium started with the merger of the two companies (it was 10 January 2000 when Steve Case of AOL and Jerry Levin of Time Warner announced the deal) and, in late 2009 on 9 December and less than a month before the decade ended, the two companies finally split up again.  Other deals were bigger, other deals took place first (Vodaphone Mannesmann was a great kick start to the new millennium, wasn’t it).  But nothing bracketed the decade as the AOL Time Warner deal.

That particular merger was actually structured as a purchase of Time Warner by AOL.  Long ago, the AOL name was dropped.  Long ago did shareholders turn away from this deal.  At its peak, AOL had a market capitalisation of around £242 billion.  Now, it has a market value of $3 billion – a staggering loss in value of 98.8%.  It is now run by a former Google exec:  who would have thought a decade ago that a Google man would be running AOL?

That deal did mark the end of the dot.com hubris.  We’ll need a few more years to find out, but maybe the 2009 split-up marks the end of the restructuring of the markets and could (along with some other big deals of 2009) be taking place around the time of the resurgence in the M&A market.  That’s the symmetry that I like.

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