Tech companies are often at the forefront of large-scale mergers and acquisitions. An acquisition is when one company takes over another – either in its entirety, or a majority share thereof. There are two ways to acquire a company: through a hostile takeover or a friendly takeover. A hostile takeover is the term used to describe when a company is bought by another without its consent. Generally, the buying company purchases a majority amount of shares to get a controlling stake in another company.
On the other end of the spectrum, there’s a friendly takeover, when both companies agree to the terms of the acquisition. Note that an acquisition and a merger are also two different concepts. A merger refers to when both companies find value in combining forces where there’s synergy in the product or service offered and they wish to come together as equals. Tech companies merge with or acquire other companies for various reasons, including:
- To gain a competitive advantage in the market, tech companies will opt to merge or acquire a company with a new piece of tech.
- To achieve economies of scale, tech firms may increase the size of the business by acquiring a company that’ll ensure that there’s a lower cost of production.
- Companies in the tech sector may acquire another company that owns or produces different parts in its value chain.
- An acquisition may occur if a tech company wants to cross sell a product that another company has to offer its consumers a broader range of products.
- Typically, especially in hostile takeover, tech companies acquire smaller companies to get rid of the competition by offering the investors an offer they can’t turn down.
Here are the top 10 largest tech acquisitions in history.
|1.||Microsoft||Activision Blizzard||$68.7 billion|
|3.||Elon Musk||$44 billion|
|4.||Avago Technologies||Broadcom||$37 billion|