2015 The Year of the Megadeals!
2015 has seen some of the biggest deals in the history of mergers and acquisitions: Coca-Cola, Shell, Visa and many more have all contributed to what is being referred to as “The Year of the Megadeal!”
But what exactly has been the driving force and motivation behind such successful deals?
April saw the world’s third largest oil and gas merger take place between Netherland based Royal Dutch Shell and British Gas Group in an estimated $81 billion acquisition, creating a company with an estimated worth of $270 billion.
The merger comes at a time of plummeting prices and a reduction in demand for the commodity. Significant regulatory hurdles, which may have hindered the merger, were cleared in August of 2015 paving the way for Shell to shed duplicate assets over the next two years and create pre-tax savings of around $2.5 billion per year. It will add approximately 25% to Shell’s oil and gas reserves and strengthen the company’s position in new overseas projects.
In August, Coca-Cola announced plans to merge with two of its European bottling plants in an effort to reduce costs by removing duplicate functions and processes in the face of declining global sales of fizzy drinks.
The new company, Coca-Cola European Partners, was formed from the merger of Coca-Cola Enterprises (CCE) with its German subsidiary (CCEAG) and Coca-Cola Iberian Partners (CCIP). It’s anticipated that the newly-formed company will benefit from economies of scale resulting in savings of $375 million over the next three years, as well as generating an additional $12.5 billion in revenue per year.
The savings from this merger will reportedly be invested in marketing within the Eurozone, in which austerity-hit and health-conscious consumers have cut back on consumption of Coca-Cola’s products. Further savings are expected to accrue from CCE’s relocation of its corporate HQ from the USA to London to take advantage of less stringent tax laws.
Visa announced its $23.4 billion takeover of Visa Europe – the European branch of its business – in early November to consolidate its global operations and take advantage of a strong dollar and low interest rates in the USA. Visa is aiming to achieve simplification in its corporate strategy while also developing growth opportunities in the UK and Europe.
Visa Europe is already the largest card network in Europe and Visa hopes to extend its card-based payments in an area with significant room to expand. Furthermore, Visa is also eager to tap into the high-tech approach Europe has to payment innovation, particularly in terms of mobile and contactless payment systems.
It seems 2015 may be merely a precursor to further megadeals in the future and industry analysts point to favourable conditions for more such deals to be struck across various sectors.
If you’re considering a merger or acquisition, of whatever size, talk to Benchmark International for specialist and knowledgeable advice. With representation throughout the Americas, Europe, Africa and Asia, Benchmark International can connect you with the right opportunity. To find out more, visit http://www.benchmarkcorporate.com.