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Three large mergers / acquisitions in the news for the past few years - Essay Example

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Three large mergers / acquisitions have been in the news the past few years which are the Time Warner - American Online merger, the KIA - Hyundai merger, and the US Airways - America West Airlines merger. The mergers were completed for financial reasons yet there were different strategies as well as financial outcomes for each merger…
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Three large mergers / acquisitions in the news for the past few years

Download file to see previous pages... In each of these mergers there have been strategies and financial outcomes of the mergers.
In 2000 Media giant Time Warner merged with Internet operating giant America Online (AOL) which created a new company worth over 350 billion dollars as it was completed to transform the internet and media industries around the world.1 The strategy of the merger was for the Media company of Time Warner to modernize to the Internet age and by merging with one of the premier Internet providers it accomplished just that. With the merger both companies have the potential to both exploit each others assets which can create the ultimate up to date media giant. The strategy was to use each company's assets to help each other in different ways. AOL has Internet options, large market shares, distribution, and they are profitable. 2While Time Warner has the media content this is important considering the lack of premium content on the Internet.3 By merging they accomplished this goal as it will use the Internet gateway of AOL to push through Time Warner content and AOL's content will be able to be seen through television screens across the world.4 The gateways both posess are that Time Warner has a United States cable network, CNN, and AOL has an online entry point.5 By using these gateways in which each has they will have an advantage on rivals in the industry.6 Financially the merger was completed to generate more income by using the strengths that each company possesses with Time Warner's media content and America Online's Internet gateway. Financially it is seen as the largest deal in history as it creates a company worth over 350 billion dollars. The merger was seen as complimentary to both companies taking advantage of each strength of content and the gateway to have that content more readily availability on the Internet for a greater profit.
The KIA - Hyundai merger was actually more of an acquisition as KIA was acquired by Hyundai in a world wide auction which had other global automotive bidders but Hyundai came out the winner acquiring the automobile giant.7 This was the third round of bidding as in the first two because none of the companies that bid on KIA could meet the minimum payment amount of creditors.8 The strategies behind the merger have come with scepticism considering Hyundai's domestic sales were down 30% the year before the merger took place.9 One reason for the merger is the fact with the acquisition of KIA Hyundai can now produce a third more automobiles then before the KIA acquisition.10 One of the main reasons for the acquisition which the company can benefit from the two factors are separate research and development capabilities, as well as the consolidation of parts acquisition and marketing plans may bring about cost savings. The financial aspect of the acquisition was seen for Hyundai to have a larger production and market for their automobiles both domestically and worldwide. KIA which had gone bankrupt as a result of the East Asian Financial Crisis was bought out yet was still managed as a separate entity. Recently the company has been in the news as the CEO of Hyundai- KIA Lee Ju-eun was detained by prosecutors for allegations about slush funds in a lobbying scandal dealing with Korean politics.11 While it can ...Download file to see next pagesRead More
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