Here is a good article from Financial Times.
In January 2000, as Steve Case unveiled the all-stock $164bn merger between AOL and Time Warner, the AOL chief executive declared it an historic moment that would transform the competitive landscape of the media business and the way people used the internet forever.
A decade later, the “deal of the century” is not only being unwound but is widely castigated as an example of the chief executive hubris that characterised a period when the worldwide value of deals exceeded $3,500bn and bankers briefly gained celebrity status but ended with their reputation in tatters.
Daniel Stillit , mergers and acquisitions analyst at UBSsays: “The decade opened at the high point of a merger wave. It’s ending at the low point”.
The new millennium began just as the US stock market was wrapping up its fifth consecutive year of double-digit gains and the rapid growth of the technology industry had started to ebb.
The urge to merge was driven by globalisation, deregulation, the need to reduce costs and the desire to gain critical mass – not to mention chief executives’ penchant for empire-building. Bigger was not only better, boards felt, but was necessary if companies were to compete and survive on the global stage.”
Read the full article here.
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