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An Example Of An Unsuccessful Merger : Causes Of A Successful Corger

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Another example of an unsuccessful merger involves internet giant America Online (AOL) and media conglomerate Time Warner. The merger deal occurred in 2000 and is still known as the largest and worst merger deal in American business history at $165 billion. The deal was presented as an equal merger but AOL, holding more valuable stock, essentially acquired Time Warner which resulted in AOL owning 55% of the new company. The proposed vision of the merger was that combining the businesses would benefit from the synergies in technological infrastructure, consumer reach, and operations. The merger was to give Time Warner the ability to digitize its content and reach out to a new online audience. As a trade-off, AOL wanted to access Time Warner’s cable systems, giving rise to innovative broadband capability and additional content to provide to it 27 million subscribers. By 2002, the companies experienced a net loss of nearly $99 billion. By 2010, the companies cut their losses and separated indefinitely. Reasons for the unsuccessful merger can be traced back to the inability to correctly evaluate organizational compatibility as well as the poor execution of growth strategies. Because of economic downturns during the period of merging, both companies experienced a decrease its advertisers and subscribers. This only escalated through a clash in business cultures as executives and employees resisted implementing the new growth strategies put in place. There was also a negative

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