2013 has been an explosive year for mergers, takeovers and acquisitions, with some mind-bogglingly large sums of money being exchanged across a wide variety of disparate sectors. Here are five of the best.
Vodafone sells its stake in Verizon Wireless
In autumn 2013 Vodafone sold its 45% stake in Verizon Wireless, America’s biggest mobile network, in a deal so large it broke records. It was the biggest deal in more than a decade and, at 130 billion US dollars, it delivered a whopping £56m windfall to shareholders. The deal ended an often less-than-happy thirteen year shared ownership relationship.
Vodaphone is planning a £6bn investment plan called Project Spring, set to speed up their 4G ambitions and invest more in new fibre optic cables. The investments will let them provide much faster broadband services, open more Vodafone high street stores, develop mobile payment services further, and allow extra investment across Europe.
Yahoo buys Tumblr
In May 2013 Yahoo agreed to buy the New York-based blogging service Tumblr for 1.1 billion US dollars in cash, a huge deal that changed the online business landscape. Yahoo promised not to “screw it up” and allow Tumblr to continue operating independently, describing the acquisition as a “unique opportunity.”
At first sight the two organisations couldn’t seem more different. But, in fact, they’re surprisingly complementary. Because Tumblr works better when it has more resources available, Yahoo’s reach and influence should deliver a better consumer experience. As a result, Yahoo will be able to increase Tumblr’s advertising revenue through its large sales force. In effect, Tumblr gives Yahoo its own badly-needed social media platform with a whole new younger generation of users, which it hopes will breathe new life into its old-fashioned brand.
Deutsche Telekom buys GTS Central Europe
In November 2013 Deutsche Telekom said it would buy GTS Central Europe, a two decades old telecoms outfit focusing on the business market. GTS provides voice and data services to complex virtual private networks and cloud services. The deal is worth a massive 546 million Euros, providing Deutsche Telekom with the fixed-line fibre optic infrastructure it needs to compete in the Polish, Hungarian, Romanian, Slovakian and Czech Republic markets.
Deutsche Telekom acquired GTS from a collection of international private equity firms who saw the value in the merger. GTS valued the deal too, excited about the “benefits and opportunities this will create for our customers and employees.” (GTS CEO Danny Bottoms).
Publicis and Omnicom merge
In late July 2013 Publicis and Omnicom merged to create the planet’s biggest marketing agency. The deal was worth an astonishing £22.8 billion, a genuine mega-merger that sparked a flurry of share price activity in the world’s biggest marketing and advertising groups. The theory is that a key factor in the merger was the intention to create a vast marketing and advertising group with the amount of commercial muscle needed to compete effectively with Google and Facebook. But it’s also tipped to deliver extra, badly-needed expertise to meet the challenge of marketing to increasingly tech-savvy consumers.
Schroders purchase Cazenove Capital
The City’s square mile has also seen its fair share of drama this year, with two of the oldest City firms announcing a merger. In July 2013 Schroders decided to buy their rival fund manager Cazenove Capital, reputed to be the Queen’s broker and dating back to 1823. Schroders itself is older, founded back in 1804, making for an unusual and poignant purchase. Schroders paid £424 million for Cazenove, which was 95% owned by its 1200 or so employees and ex-employees, all of whom will benefit from £1.35 cash per ordinary share. The tie-up between the two city firms has created one of Britain’s biggest private bankers and wealth managers, merging Schroders’ assets of £229.2bn with Cazenove’s £11.2bn, but the venerable Cazenove brand name will remain.
What does the future hold?
The only certainty is uncertainty. After a mixed year for business sales in 2012, we can expect comparable surprises in 2014 as the UK and world economies recover and the internet continues to profoundly change the way business works.
About the Author: This article is written by James Sheehan, a business analyst based in Aberdeenshire.