While market conditions have sparked a number of mergers and acquisitions recently, history has proven that making a deal that will stand the test of time can be difficult. While blending corporate cultures and moving forward as a single entity is often trying for two companies that recently joined forces, some would argue that just setting the deal up is the most difficult step.
Many of Wall Street's biggest potential deals have fallen through for a host of reasons including regulatory issues, shareholder pushback and bidding wars. Over the past 20 years, markets have watched some of the biggest potential partnerships nearly come to fruition, only to fall through at the last second. Here's a look at some of the biggest M&A deals that never actually happened.
1. U.S. Treasury Crushes AbbVie's Plans To Purchase Shire
More often than not, regulators get in the way of deals that might otherwise be profitable. For AbbVie Inc ABBV, inversion laws were to blame for ruining the pharmaceutical firm's plans to acquire Shire PLC (ADR) SHPG.
The two had agreed to a $54 billion deal that would have seen AbbVie move its headquarters overseas to Europe. In doing so, AbbVie would have saved on corporate taxes, but the U.S. Treasury passed new inversion laws just before the deal was completed, making the agreement much less profitable for AbbVie.
In the end, AbbVie opted to pay a $1.635 billion breakup fee rather than go through with the deal sans tax breaks, and a debate about the new laws ensued. Since that time, the Treasury's new rules have prevented a number of firms from dodging taxes through overseas acquisitions.
2. AstraZeneca Narrowly Avoids Takeover
In 2014, U.S. pharmaceutical giant Pfizer Inc. PFE was on the hunt for yet another acquisition, this time targeting British rival AstraZeneca plc (ADR) AZN.
The two went through a month of hostile negotiations that ended with Pfizer making a $118 billion offer to AstraZeneca's board. The UK-based drugmaker rejected the offer, saying that it undervalued the firm, leaving Pfizer to decide whether to put the offer to AstraZeneca shareholders.
In the end, Pfizer opted to leave the decision up to the board and walked away from the deal. At the time, many expected that Pfizer would revisit its acquisition plans later, but new inversion rules that take away from the tax benefits of international mergers have made that situation an unlikely one.
3. Omnicom And Publicis Groupe Just Couldn't Get Along
One of the biggest reasons that mergers fail is the inability of two separate entities to effectively combine. Differing opinions regarding how the new firm should be run, what the corporate culture will be like and how leadership will change have been the backbone some disastrous unions in the past. That's what may have happened to ad firms Omnicom Group Inc. OMC and Publicis Groupe SA (ADR) PUBGY had they not realized their differences before their merger was complete.
In the spring of 2014, a partnership between France's Publicis Groupe and U.S.-based Omnicom fell apart at the seams when leaders of the two firms were unable to resolve a power struggle over how the new entity would be managed. Everything from how positions should be filled to the way the firm's management would spit became a competition, and both companies worried that they were losing their "equal partner" status.
Many thought the deal would create a new advertising superpower to move forward into the tech age, but too many disparities led both firms to throw in the towel before the agreement was finalized.
4. Sysco Shies Away From U.S. Foods
Often, Wall Street heavyweights look to the old adage, "If you can't beat them, join them" when it comes to M&A activity. That was the case for SYSCO Corporation SYY in 2013 when the firm proposed an acquisition deal worth around $8.2 billion of rival U.S. Foods.
Together, the two would have made up around 75 percent of the food distribution market in the United States, creating a powerful industry leader. However, after years of negotiations, the deal was quashed by a ruling from the Federal Trade Commission, which said such a partnership would have a negative impact on competition. Though Sysco could have challenged the ruling, CEO Bill DeLaney announced in 2015 that the firm would instead pay a $300 million termination fee to U.S. foods and walk away from the deal.
5. American Home Products Is Outbid For Warner-Lambert
Sometimes, M&A deals are further complicated by heated bidding wars. In November 1999, that was the situation for Warner-Lambert, a pharmaceutical company being courted by American Home Products.
Both firms' boards had approved a $53.8 billion merger deal and were set to complete in the second quarter of 2000. However, before the deal was final, Pfizer submitted its own $84.2 billion bid for Warner-Lambert. The ordeal threatened to spark a bidding war for Warner-Lambert, with Procter & Gamble Co PG even considering entering the ring.
However, in the end Pfizer went on to acquire Warner-Lambert, albeit with some resentment from Warner-Lambert execs. American Home Products didn't go home empty handed though, Pfizer agreed to pay the firm a $1.8 billion breakup fee, the largest ever at the time.
6. Comcast Fails To Buy Disney
Hostile takeovers are a reality of the M&A landscape, but corporate bullies don't always get their way. In 2004, media giant Comcast Corporation CMCSA made a play for Walt Disney Co DIS in an effort to create one of the largest media firms in the world.
Comcast proposed a deal worth $66 billion, but Disney CEO Michael Eisner quickly rejected the offer. However, in the wake of Comcast's proposal, Eisner was ousted from the company's board, leading some to speculate that the firm's leadership was interested in discussing a deal.
In the end, Disney's board was opposed to the possibility of a merger, and Comcast decided to abandon its plans and withdrew its bid.
7. Regulators Block MCI WorldCom Offer To Buy Sprint
The telecom landscape could look very different today if European regulators hadn't stepped in to block MCI WorldCom's plans to acquire Sprint Corp S.
In 1999, MCI outbid BellSouth with a $129 billion deal to join the two firms and create an international telecom superpower. However, the European Commission stepped in saying that the new entity would stifle competition, leaving the deal dead in the water.
Things only went downhill for WorldCom after that; the firm eventually went bankrupt due to accounting fraud and was eventually snapped up by Verizon Communications Inc. VZ.
8. Microsoft Deterred From Intuit Purchase
Back in 1994, Microsoft Corporation MSFT was planning to execute the software industry's largest ever acquisition with a $1.5 billion deal to buy Intuit Inc. INTU.
The deal would have seen Microsoft take ownership of Intuit's wildly popular Quicken financial software, which boasted around six million users. However, as Microsoft owned the Money, the only rival product to Quicken at the time, the U.S. Justice Department sued to block the deal.
Bill Gates, Microsoft's then CEO, decided to abandon the acquisition rather than fight the case, saying that a drawn-out court case would be detrimental to the firm's progress in the financial software market at a time when demand for such products was on the rise.
9. Dynegy Dodges Enron Bullet
In 2001, Dynegy Inc was set to carry out a $9 billion merger with Enron Corp. However, the firm pulled out at the last minute when Standard & Poor's cut Enron's debt to "junk bond" status and worries that the firm was teetering on the edge of bankruptcy began to emerge.
Following the failed merger, Enron filed for bankruptcy and sued Dynegy for what it said were disingenuous negotiations. In the end, Enron unraveled in the public eye and Dynegy later acquired one of Enron's pipelines.
10. Dollar General Loses The Battle Of The Dollar Stores
At the beginning of 2015, discount chain Family Dollar Stores, Inc. FDO found itself bogged down in a bidding war between Dollar General Corp. DG and Dollar Tree, Inc. DLTR.
Dollar General, the leader in the dollar store space, had been working for years to acquire rival Family Dollar without success. However, when activist investor Carl Icahn bought purchased a near 10 percent stake in Family Dollar and began pushing for a merge with Dollar General, the tables began to turn. Dollar General's takeover efforts were complicated by a surprise bid from Dollar Tree, presenting Family Dollar shareholders with a choice – take an $8.7 billion bid from Dollar Tree to bring together the second and third largest dollar store retailers, or accept a higher $9.1 billion offer from industry leader Dollar General.
Shareholders overwhelmingly supported Dollar Tree's bid, leaving Dollar General to compete with a new market superpower. The very public dollar store spat also raised questions about the involvement of activist investors in M&A deals and led some firms to call for new rules limiting activist investors' power.
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