Takeovers are a common part of the business landscape. Some takeovers can lead to incredible success, while others run into problems like cultural differences or financial setbacks. In this guide, we’ll break down what a business takeover involves, share real-world examples, and explore the reasons why some takeovers don’t go as planned.
What is a takeover in business?
A business takeover happens when one company gains control of another by purchasing most or all of its shares. Companies pursue takeovers to grow their market presence, expand their offerings, or gain a competitive edge. They typically fall into two main categories:
Friendly takeover: The target company agrees to be acquired, often working collaboratively with the acquiring company to ensure a smooth transition.
Hostile takeover: The acquiring company bypasses the target company’s management and directly approaches its shareholders to gain control, often against the wishes of the target company’s leadership.
Takeovers are also categorised based on the industry relationship between the two companies:
Horizontal takeover: Between companies in the same industry (like two competitors).
Vertical takeover: Involving companies in the same supply chain (like a manufacturer acquiring a supplier).
Conglomerate takeover: Between companies in entirely different industries.
Learn more in our full guide to what a takeover is in business.
Examples of takeovers in business
Takeovers are a pivotal aspect of business strategy, often shaping industries and creating global market leaders. Below, we’ll explore some of the most notable examples of business takeovers.
Successful takeovers
1. Disney acquires Pixar (2006)
Disney’s acquisition of Pixar marked a turning point for the entertainment giant, which had been struggling with its animation division. Pixar, already a leader in computer-generated animation, brought innovation, creativity, and a proven track record with hits like Finding Nemo and The Incredibles.
Deal value: $7.4 billion
Why it worked: The acquisition aligned well with Disney’s existing business model and allowed Pixar to operate autonomously while benefiting from Disney’s marketing and distribution strength. This combination resulted in massive box-office successes and revitalised Disney’s reputation for animated films.
2. Facebook acquires Instagram (2012)
At the time, Instagram was a fast-growing photo-sharing app with 13 employees and millions of users. Facebook recognised its potential as a major player in the evolving social media landscape.
Deal value: $1 billion
Why it worked: Facebook allowed Instagram to grow independently while integrating it into its larger advertising ecosystem. This strategic move helped Instagram become a major revenue driver for Meta, valued at over $70 billion by 2024.
3. Google acquires YouTube (2006)
YouTube, just a year old at the time of acquisition, had already established itself as a dominant video-sharing platform. Google recognised its potential to complement its business and enhance its presence in online video content.
Deal value: $1.65 billion
Why it worked: Google invested heavily in scaling YouTube’s infrastructure and monetisation tools, turning it into a global entertainment hub. Today, YouTube generates billions in ad revenue annually.
4. Amazon acquires Whole Foods Market (2017)
This acquisition allowed Amazon to enter the brick-and-mortar retail space, combining its technological expertise with Whole Foods’ reputation for high-quality, organic groceries.
Deal value: $13.7 billion
Why it worked: Amazon leveraged its logistical efficiency to lower costs and improve Whole Foods’ through online delivery, integrating it into its Amazon Prime ecosystem.
Failed takeovers
1. Daimler-Benz acquires Chrysler (1998)
Billed as a 'merger of equals', this deal aimed to create a global automotive powerhouse. However, cultural clashes between the German and American management styles created significant friction. Chrysler’s declining performance further strained the relationship, and Daimler eventually sold Chrysler in 2007.
Deal value: $36 billion
Why it failed: A lack of shared vision, poor communication, and weak integration planning.
2. Time Warner merges with AOL (2000)
This merger aimed to combine AOL’s internet services with Time Warner’s media assets, capitalising on the internet boom. However, the dot-com bubble burst shortly after, wiping out much of AOL’s value and leaving the combined entity with significant losses.
Deal value: $165 billion
Why it failed: Overinflated valuations, changing market conditions, and minimal synergy between the two companies.
3. Microsoft acquires Nokia’s mobile division (2014)
Microsoft purchased Nokia’s mobile phone business to establish itself as a major player in the smartphone market. However, the move failed to generate the expected market share gains, and Microsoft eventually wrote off the acquisition as a loss.
Deal value: $7.2 billion
Why it failed: Lack of consumer interest in Windows Phone, poor timing, and an inability to compete with Apple and Android.
4. Quaker Oats acquires Snapple (1994)
Quaker Oats aimed to leverage its distribution channels to grow Snapple’s presence in the beverage market. However, it misjudged Snapple’s niche appeal and failed to connect with its core consumer base. Three years later, Quaker sold Snapple for just $300 million.
Deal value: $1.7 billion
Why it failed: Misalignment between the two brands’ strategies and a lack of understanding of Snapple’s market.
UK business takeover examples
1. Tesco acquires Booker Group (2018)
Tesco, the UK’s largest supermarket chain, acquired Booker Group, a wholesaler. The takeover strengthened Tesco’s position in the food supply chain and expanded its market reach.
Deal value: £3.7 billion
2. Sainsbury’s and Asda proposed merger (2019)
Sainsbury’s and Asda planned to merge to create the UK’s largest grocery retailer. However, the Competition and Markets Authority (CMA) blocked the deal, citing concerns over reduced competition.
Deal value: £7 billion (proposed)
3. Melrose acquires GKN (2018)
Engineering firm Melrose Industries acquired GKN, a historic British aerospace and automotive company, despite significant opposition. The takeover aimed to boost GKN’s profitability through restructuring.
Deal value: £8.1 billion
4. Cadbury acquired by Kraft (2010)
Kraft Foods took over Cadbury, a beloved UK chocolate maker. While the deal expanded Kraft’s global reach, it sparked controversy due to fears over job cuts and cultural dilution.
Deal value: £11.5 billion
Why do takeovers fail?
Takeovers can fail for a variety of reasons, including:
Cultural clashes: Differences in organisational culture can lead to mismanagement and employee dissatisfaction.
Overestimated synergies: Unrealistic expectations about cost savings or revenue growth can derail a takeover.
Poor due diligence: Failure to identify financial or operational issues during the assessment phase can lead to unexpected challenges.
Regulatory hurdles: Takeovers can be blocked or delayed by competition authorities, as seen in the Sainsbury’s-Asda case.
Market changes: Sudden economic shifts or industry disruptions can make the acquisition less valuable.
FAQs
What is the purpose of a business takeover?
A takeover can help a company expand its market share, enter new industries, or gain valuable assets such as technology, talent, or intellectual property.
Are hostile takeovers common in the UK?
Hostile takeovers are less common than friendly ones in the UK, as they are often met with strong resistance from the target company’s management and shareholders.
What happens to employees during a takeover?
This depends on the terms of the takeover. In some cases, employees retain their roles, while in others, restructuring or redundancies may occur.
Final thoughts
Business takeovers can shape industries, create market leaders, and drive innovation, but they are not without risk. Understanding the factors behind successful and failed takeovers - such as cultural alignment, clear goals, and thorough due diligence - can help businesses navigate this complex process.
If you're looking for legal advice, we're here to help. Get in touch today for a free quote and to see how our solicitors for buying a business can help.
References
Disney to acquire Pixar from Walt Disney
Facebook buys Instagram from the BBC
Google buys YouTube from The Guardian
Amazon to acquire Whole Foods from Whole Foods