Key mergers and acquisitions - May/June
Date posted: 3rd Jul 2014
Whilst the mergers and acquisitions press was occupied with the will-they-won’t-they of Pfizer and AstraZeneca (which ended up a ‘won’t they’) many other deals were taking place. Here are some of the key developments that had a little more success than Pfizer.
Apple and Beats
Apple has a long and eye-watering list of acquisitions that have taken place over its 38 year history, so with its deal with Beats being the most expensive ever, it sent shockwaves around both the tech and music worlds. For a staggering $3 billion (£1.8 billion), Apple took over Beats Audio, the headphones, speaker and music streaming business set up jointly by rapper Dr Dre and record industry executive Jimmy Lovine.
This deal made Dr Dre the world’s richest rapper, with an estimated personal fortune of around $1 billion (£588 million). It also gives Apple a competitive advantage over its peers, to try and make up some of the ground they’ve been making in recent months.
Carphone Warehouse and Dixons
‘Dixons Carphone’ was created when these two electrical giants joined forces. The £3.8 million merger will see Currys, PC World and Carphone Warehouse all exist under the same umbrella. As a whole, Dixons Carphone is now responsible for some 3,000 stores, an imposing online presence and sales in the region of £11 billion.
Looking ahead, the new company is also looking to diversify its offering, taking on domestic heating, lighting and security services - all of which could be controlled around the “smart home” using just a mobile device.
Halfords and Boardman
The luxury bicycle manufacturer set up by iconic rider Chris Boardman was acquired by Halfords for a reported sum of between £10 and £15 million. Whilst the buyout will see Boardman remain a standalone company, it will allow Halfords to sell its products without paying royalties. Chris Boardman is set to remain in place as chairman and design director.
Halfords took the decision after choosing to align its business more closely with cycling than ever before. Following on from strong results in the Olympics, World Championships and Tour de France, Halfords saw its bike business blossom and save it from potentially damaging financial reports. Now, with similar cycling success expected this year, it’s moved even further in this direction.
Emperador and Whyte & Mackay
Scotch whiskey distiller Whyte & Mackay is no stranger to buyouts, having previously been sold to India’s United Spirits seven years ago. Now the Glasgow-based distiller has moved on again - this time to Emperador, a brandy manufacturer from the Philippines. The move came after another whisky manufacturer, Diageo Bell, took over United Spirits. It ruled that Whyte & Mackay competed with its own product so sold it on for £430 million - subject to regulatory approval in both India and Britain.
Vodafone and Cobra Automotive Technology
In a bid to steal a march on the connected car market, Vodafone has bought Italian tech firm Cobra Automotive Technologies for 145 million Euros (£116 million). This could help it reach a huge new market, as the number of connected cars on Britain’s roads rises from ten to 90 per cent in just the next six years.
Sainsbury’s and Dansk
British supermarket giant J Sainsbury’s teamed up with Dansk from Denmark in a bid to bring budget chain Netto back to the UK. With the budget market continuing to show strength, the two have joined forces to open 15 new Netto stores across the UK by 2015. If the move is a successful one - and achieves the aim of taking market share from Aldi and Lidl - many more stores will be opened in a second stage of roll outs.
The joint venture is expected to cost around £25 million.
Santander and GE Money Bank
Spain’s largest bank looked to capitalise on a growing EU economy by taking over GE Money Bank AB, the consumer finance business of GE Capital operating in Denmark, Norway and Sweden. The 700 million Euro (£561 million) deal should also boost Santander’s geographical diversification and brand reach across Europe.
Whilst the announcement brought with it a small-scale drop in share value, overall gains to date this year are at around 20 per cent.
Google and Dropcam
Unconcerned with accusations that its privacy dealings were Orwellian at best, Google opted to acquire Dropcam, a home surveillance business specialising in cameras that can feed footage straight to equipped smartphones. Bought for $555 million (£327 million), Dropcam will fit into Google’s Nest venture, which is concerned with making homes fully connected on the “internet of things”.
Dropcam was chosen because it filled a gap previously in Google Nest - that of home security. Of course, despite plenty of protestations to the contrary, Google has still faced questions on its use of Dropcam for civilian monitoring.
Japan Tobacco and E-Lites
Japan Tobacco is the latest in a long line of traditional cigarette makers to venture into the e-cig market. With its E-Lites takeover, it is hoped the firm will get ahead long in advance of the time when e-cigarettes overtake their traditional alternatives in terms of consumption (something which analysts say is on the horizon.
The financial terms of this buyout have not been declared.
Priceline and OpenTable
Travel and ticketing company Priceline claimed “travellers are diners”, as it bought online restaurant reservation business OpenTable. The view was to expand Priceline into a new segment and enable further brand cross-promotion.
Some 15 million people around the world book themselves a restaurant sitting through OpenTable every single month. It operates in the UK, US, Japan, Germany and Mexico. Priceline agreed to pay a 46 per cent premium on OpenTable shares as part of the takeover, making for $103 (£61) instead of the $70.43 (£41.49) upon which they closed the day before.
Oracle and Micros Systems
Hospital and retail tech manufacturer Micros Systems was bought in June by Oracle’s billionaire founder Larry Ellison. The move, which cost around $5.3 billion (£3.1 billion), was forecast to be a huge boon for both companies - something which transpired almost immediately as stocks rose to record levels on the morning of the takeover announcement.
It has since been noted that a link with Oracle could see Micros Systems reach a much larger, potentially worldwide audience.
Whilst May and June, on the whole, didn’t see merger and acquisition levels that set the world alight, there was certainly plenty to consider outside of the much-talked-about Pfizer and AstraZeneca debacle.