The past 12 months have produced a seemingly endless string of mergers and acquisitions (M&As). Over $3.5trn worth of deals were made worldwide, marking the fourth consecutive year the $3trn benchmark has been passed.
As competition across multiple sectors heats up and is disrupted by new entrants and technology, companies are taking dramatic steps to cement their positions and secure their industry futures. M&As, whether horizontal (buying the competition) or vertical (buying up and down the supply chain), can drastically improve a company’s strategic standing in its market.
Here, World Finance lists the five most noteworthy M&As of the past year. They may not necessarily be the biggest, but they have already made waves that are well worth following in the years to come.
Companies are taking dramatic steps to cement their positions and secure their industry futures
1 – Amazon/Whole Foods Market – $13.7bn
In perhaps the most visible deal of the past year, the e-commerce behemoth Amazon stepped out into the real world last August with a major acquisition of the brick-and-mortar food retail company Whole Foods Market. On paper, Amazon and Whole Foods don’t seem like a natural match: Amazon is known for its absurdly quick turnover of inventory and its logistical mastery. Whole Foods, on the other hand, gives off the vibe of a local artisanal food shop where time and effort goes into everything. The effects on the food retailer have been quick, with lower prices and Amazon lockers in stores within the first few months. The changes are likely to attract a new customer base that has avoided Whole Foods because of its niche reputation and relatively high prices.
2 – Disney/21st Century Fox – $52.4bn
In a real shake-up of the entertainment business, Disney announced it would purchase the entertainment assets of Rupert Murdoch’s 21st Century Fox in December, for a mammoth $52.4bn. The deal brings together two of the biggest entertainment companies in the world, and future-proofs Disney’s vast empire. For avid movie fans, this deal means the possibility of seeing lucrative franchise crossovers. X-Men, The Fantastic Four and Deadpool may finally team up with their Marvel brethren in Disney’s Marvel Cinematic Universe. Through this acquisition, Disney is also doubling its stake in the streaming service Hulu, which solidifies its position in the streaming market, especially given its planned direct-to-consumer streaming service, which is set to launch in 2019.
3 – CVS/Aetna – $69bn
In what is sure to rock the US healthcare market, CVS – the biggest pharmacy chain in the country – announced the purchase of the fifth-largest health insurer for $69bn in December. So significant is the deal, in fact, that the American Antitrust Institute has lobbied the US Government to block the deal, arguing that it would leave other players in the market with little or no incentive to compete. The deal comes as industry titans are feeling threatened by major players like Amazon, which is also poised to enter the market. CVS’ merger also put pressure on other significant players in the market to make bold moves; health insurer Cigna bought prescription benefit management company Express Scripts in a $67bn deal.
4 – Intel/Mobileye – $15.3bn
Intel – which was recently overtaken by Samsung as the world’s largest chipmaker – has made a major move into the autonomous driving space with its acquisition of Israeli visual sensor company Mobileye in August. Through the merger, Intel is looking to position itself as a leader in what is undoubtedly one of the hottest fields in tech right now. The companies are already in partnership with German automaker BMW on a fleet of 40 self-driving vehicles, which will hit the road in the second half of 2018. Mobileye’s technology is already used by a number of players in the market, most notably Tesla, which has perhaps the best-recognised automated driving programme in the car industry.
5 – Verizon/Yahoo – $4.48bn
Anyone old enough to remember the internet in the late 1990s will remember Yahoo’s digital dominance. It was the most popular starting point on the web in 1998, before the burst of the dotcom bubble – and, more importantly, Google – violently wrenched it from its perch. Verizon, the American telecommunications conglomerate, finally ended Yahoo’s tenure as an independent company last June with a $4.48bn purchase. Yahoo’s glory days may be long over, but its recent history has not been underwhelming: in 2016, Yahoo was the world’s sixth most visited site. The company now operates under Oath, Verizon’s digital content subsidiary, which also controls AOL and Huffington Post.