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Part 10 Mergers, Corporate Control, and Governance

T

he scale and pace of merger activity in the United
States have been remarkable. Table  31.1 lists just a few
recent mergers. Notice the high proportion of cross-border
mergers between firms in different countries. Look also at
Figure  31.1, which shows the number of mergers involving
U.S. companies for each year from 1962 to 2013. In 2006,
a record year for mergers, U.S. companies were involved in
almost 12,000 deals totaling nearly $1.5 trillion. During such
periods of intense merger activity, management spends

significant amounts of time either searching for firms to acquire

or worrying about whether some other firm will acquire them.

A merger adds value only if the two companies are worth

more together than apart. This chapter covers why two com-

panies could be worth more together and how to get the

merger deal done if they are. Many marriages between com-

panies are amicable, but sometimes one party is dragged

unwillingly to the altar. So we also look at what is involved in

hostile takeovers.

Mergers

31

CHAPTER

Industry Acquiring Company Selling Company

Payment

($ billions)

Telecom Verizon Vodafone’s holding of Verizon

Wireless (U.K.)

130

Telecom Charter Communications Time Warner Cable 79

Pay TV AT&T DirectTV 67

Pharmaceuticals Actavis (Ireland) Allergan 66

Mining Glencore (Switzerland/U.K.) Xstrata (Switzerland/U.K.) 49

Medical equipment Medtronic Covidien (Ireland) 47

Cement Holcim (Switzerland) Lafarge (France) 47

Food Heinz Kraft 40

Oil services Halliburton Baker Hughes 35

Tobacco Reynolds American Lorillard 27

Pharmaceuticals Actavis (Ireland) Forest Laboratories 25

Telecom Altice (France) SFR (France) 24

Social media Facebook WhatsApp 22

Electrical equipment General Electric Alstom (France) 17

Advertising Publicis Groupe (France) Omnicom Group 17

Beverages Suntory (Japan) Beam Inc. 16

Health care Thermo Fisher Scientific Life Technologies 13

Pharmaceuticals Merck (Germany) Sigma-Aldrich 13

Automotive ZF (Germany) TRW 12

❱ TABLE 31.1^ Some

important recent merger

announcements.

Note: Several of these mergers were

pending and subject to regulatory

approval.