Financial Insights & Resource Center | Counterweight Private Wealth

The Ongoing Twitter/Musk Affair and 3 Other Corporate Takeovers that Made Waves

Written by Nick Murphy, CFP® | April 28, 2022

Unless you’re living under a rock, you’ve likely noticed the world is enthralled with the Musk/Twitter acquisition. And why wouldn’t they be? The world’s richest man may actually succeed in taking over the world’s most influential social media platform. The last time a financial giant decided to own a media company was when Jeff Bezos bought The Washington Post.

As we watch the story unfold, we can only wonder about the implications of this corporate takeover. Surely the event will reverberate far beyond the realm of social media.

But this isn’t the first time a corporate takeover has made waves. First, we’ll take a look at the excitement of the Musk/Twitter acquisition. Then, we’re going to dive in on three other takeovers that are even more significant than Musk’s takeover of Twitter.

Elon Musk’s Hostile Takeover Bid at Twitter

In early April, technology mogul and business visionary Elon Musk acquired a 9.2% stake in Twitter and announced his intentions to influence the social media giant. Over the following weeks, we have seen Elon nearly obtain a seat on Twitter’s board of directors, only to decline and state his intention to acquire the company instead.

Twitter is a social media platform that serves as a crucial means of communication for many people, especially in technology and media. With Musk at the helm of Twitter, many expect to see new developments and changes that will make what has become a form of public communication more accessible and efficient, including the long-awaited edit button.

What makes this acquisition unique?

While corporate takeovers are not unique, this isn’t your run of the mill acquisition. One distinctive element of this acquisition, in particular, is that it is not one corporate conglomerate taking over another. It is a single individual taking over a corporation in a deal valued at about $44 billion.

Though it is not unheard of for individual investors to acquire businesses, the valuation and public implications make this a deal worth watching. If Musk successfully acquires and takes Twitter private, shareholders will be cashing out at a significant premium. Musk agreed to pay about 28% over the price before all the news first broke.

But, it’s important to remember that nothing is certain until the deal is finalized. So, for now, shareholders will just have to wait and see how everything plays out.

How long could the acquisition take?

The acquisition process usually takes anywhere from six months to a year. According to the New York Times, Twitter has informed its employees that the deal is not likely to close for 3-6 months.

But what happens if the deal falls through? According to a new SEC filing, Musk would potentially owe Twitter $1 billion if his financing sources fall through. On the flip side, Twitter would owe Musk $1 billion if shareholders reject the offer or if it finds a more attractive buyer. The deal is expected to close by October 24.

Until the deal is finalized, Twitter will continue to trade on the stock market. That means that, if you’re so inclined, you can still buy shares of Twitter. But, it’s important to remember that there is a risk that the deal falls through and you’re stuck with stock in a publicly traded company that has to bounce back from a failed acquisition. So, you know your maximum upside, but not the downside.

3 Significant Corporate Takeovers

The three other acquisition attempts we’re going to look at (and we say attempt intentionally) are InBev/Anheuser-Bush, Halliburton/Baker Hughes, and Vodafone/Mannesmann. In addition to the acquisition details, we’ll consider the implications of each and the effect they had on the business world.

Acquiring Company: InBev
Target Company: Anheuser-Busch
Takeover Bid: $46 billion
Final Acquisition Cost: $52 billion

In 2008, InBev, a Brazilian-Belgian brewing company, made a hostile takeover bid for Anheuser-Busch. The offer was $65 a share, the equivalent of $46 billion for the American brewery.

The acquisition would have given InBev control of some of America’s most iconic beers, including Budweiser and Bud Light. The company already owned Stella Artois and Beck’s.

The bid sent shockwaves through the business world, as many felt that a foreign takeover of an American company was against the interests of shareholders.

Ultimately, Anheuser-Busch’s board accepted an increased offer of $70 per share for $52 billion. The acquisition went through in July 2008. This led Anheuser-Busch InBev to become the largest brewer in the world. This deal is among the most significant corporate takeovers to date, given the company’s deep cultural ties to American society.

Acquiring Company: Halliburton
Target Company: Baker Hughes
Takeover Bid: $28 billion
Final Acquisition Cost: Unsuccessful

Another significant corporate takeover took place in 2015 when Halliburton sought to acquire Baker Hughes in a deal worth $28 billion.

Halliburton is one of America’s largest oilfield services companies, while Baker Hughes is a major supplier to the oil industry. This merger would have created a behemoth company that controlled almost half of the market share in the industry.

Antitrust regulators were concerned about this level of control and pressured Halliburton to divest certain assets or face being broken up by the government. After months of negotiations with both antitrust regulators and shareholders, the deal was off without plans to continue.

This corporate takeover attempt remains among the most significant takeovers in recent history as it illustrates how industry regulators can influence corporate mergers and acquisitions.

Haliburton was required to pay Baker Hughes a $3.5 billion breakup fee when the deal fell through. Similarly, the Musk/Twitter acquisition has a provision outlining a $1 billion fee if the deal is not finalized.

Acquiring Company: Vodafone
Target Company: Mannesmann
Takeover Bid: $46 billion
Final Acquisition Cost: $180 billion

No list of significant corporate takeovers would be complete without making mention of the largest merger on record. In 1999, Vodafone, a British telecom company, bought German industrial manufacturer and conglomerate Mannesmann in a deal worth $180 billion.

At the time, and to this day, this was the largest takeover in history. The deal signaled a shift away from traditional manufacturing companies and into more tech-focused firms. It also heralded Vodafone as one of the world’s leading telecom giants.

Nearly twenty years later, Mannesmann is still remembered as one of the most significant corporate takeovers in history for its sheer size and scope.

Today, corporate takeovers remain commonplace as investors and companies seek new opportunities to grow and innovate. Elon Musk acquiring Twitter is undeniably exciting to watch unfold, but it will be difficult to top some of the monumental deals that have come before.

Only time will tell how this acquisition could transform the social platform (and business precedents to boot). In the meantime, we have some pretty juicy news to watch unfold as the deal progresses.