As discussed in my previous post, this year has seen a tremendous influx in deal activity, which naturally has led to an increase in the number of failed deals.
As we look back on this year, here are the five largest failed transactions of 2014:
1. AstraZeneca/Pfizer: In May, Pfizer walked away from its $118 billion offer to buy London-based AstraZeneca, in what would have been the largest pharmaceutical merger in recent years. While the tax-inversion regulations were not yet in place when the merger went bust, they might be enough now to keep Pfizer from revisiting the deal after the obligatory three-month cooling period.
2. Time Warner/21st Century Fox: When 21st Century Fox announced its proposed takeover of Time Warner Inc., shareholders were less than enthused. This led to decreased share value and, when combined with Time Warner’s reluctance to negotiate, it ultimately pushed the buyer away.
3. Shire/AbbVie: Just weeks after the U.S. Treasury announced its new regulations targeting tax inversion deals, the proposed $54 billion acquisition of Shire by U.S. based AbbVie was officially called off. In the first major casualty of the Treasury’s decision, AbbVie would no longer be able reap the financial benefits of reincorporating in Britain.
4. T-Mobile US/Iliad SA: Following a four month pursuit of T-Mobile US, Iliad SA, a French telecommunications company, abandoned its attempt at consolidation and entry into the North American market. After a weak initial offering in July, Iliad stocks slid 25% and concern grew as to whether or not the company had the financial resources to follow through with the deal. Even a follow-up offer several months later failed to capture the interest of Deutsche Telekom, T-Mobile’s majority owner, leaving the deal dead in its tracks.
5. Omnicom/Publicis Groupe: The $35 billion merger between Omnicom and Publicis Groupe SA was called off by both parties in May after reports of disagreements between executives over the leadership of the combined entity, and which company would legally be acquiring the other. In the end, the ability to house the world’s most prominent advertising agencies under one roof wasn’t worth the endless clashing of corporate cultures.
I believe that the number of failed deals this year is going to make both buyers and sellers more cautious moving forward. This, however, will be a boon to the deals that do go through, as it will signify a more solid foundation which will lead to higher chance of long-term success.
Source:
S&P Capital IQ
