Elon Musk spent $44 billion on Twitter In 2022, it seems that the mergers and acquisi- tions rules have changed. Social media platform Twitter – now called X – was an independent company headed by CEO Jack Dorsey before he sold it not to merge with another company, but
to billionaire Elon Musk. On April 14 that year, Musk made an unsolic- ited offer to purchase Twitter, Inc. for US$43 billion, over 20 times the company’s projected 2022 operating cash flow. Later that month, the company announced that they had accepted a
HISTORY’S WORST MERGERS AND ACQUISITIONS
Mergers and acquisitions are the business transactions wherein the ownership of organisations, or part of their operation, is consolidated with another organisation. These transactions can provide benefits to both parties, including reducing financial risk, diversifying one party’s portfolio, increasing a company’s resources and capacity, and cornering a larger section of the market. However, many mergers and acquisitions fail – meaning the deal becomes unprofitable for both parties. Let’s examine a few which failed in a big way. By Aoife Hilton
AOL and Time Warner lost $165 million In January 2000, America Online (AOL) po- sitioned itself as a leader in dial-up internet services across the United States. The tech company purchased the mass media and enter- tainment conglomerate for US$165 billion, cre- ating a company with an estimated total value of US$360 billion. For AOL, the Time Warner merger seemed like an opportunity to distribute content across both organisations’ networks. For Time Warner, the purchasing company offered more reach for
their media properties. AOL made their acquisition during the dot-com bubble – wherein investors valued their services high above the value they actually offered, and projected stronger sustainability and growth for internet providers than they could… provide. However, investors started pulling out when a market downturn became apparent from March to the end of 2000. The bubble burst. AOL’s mar- ket cap dropped from US$226 billion to US$20 billion. Time Warner officially separated from AOL in 2009.
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