In the past year, regulatory pressures have intensified around recent mergers & acquisitions (M&As). This leaves companies facing a double onslaught – both financial setbacks and the harsh glare of negative media scrutiny.
In 2023, European and U.K. antitrust regulators stood in opposition to several significant M&A deals. This resonated in the news cycle throughout the year with persistent turmoil. The trend not only thwarted high-profile deals but led to the ballooning value of unrealized transactions on both sides of the Atlantic.
In the aftermath of failed M&A attempts, effective communication emerges as a strategic imperative. Strategic comms require a nuanced approach that considers stakeholder impact and heightened scrutiny from regulators and the media alike.
The most recent casualty in this regulatory battleground is Amazon’s ambitious plan to acquire robot vacuum manufacturer iRobot. The deal valuation reached approximately $1.35 billion.
In early February, Amazon officially pulled the plug on the iRobot deal, citing “undue and disproportionate regulatory hurdles.” The transaction faced scrutiny from both U.S. and EU antitrust regulators. The European Commission took a particularly forceful stance.
While Amazon’s case is the latest example of regulatory roadblocks getting in the way of M&A deals, it is not the only one. Several other major tech acquisitions encountered similar challenges, leading to a slowdown in M&A activity near the end of 2023.
In December, Adobe abandoned its $20 billion acquisition of design software provider Figma. According to Adobe, there was “no clear path to receive necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority.”
Adobe’s chair and CEO, Shantanu Narayen, expressed the company’s disagreement with the recent regulatory findings. He noted that despite their shared vision to redefine the future of creativity and productivity, both companies deemed it in their best interests to move forward independently.
Regulators took issue with Adobe’s near-monopoly in the design software market. They raised concerns about potential harm to innovation if Figma, a rapidly growing product design platform, were to be absorbed by Adobe.
Meta’s $400 million acquisition of Giphy encountered challenges from British regulators. Regulators flagged concerns about potential competition issues in social media and display advertising.
Shutterstock’s acquisition of Giphy was perceived as a bargain and earned overwhelmingly positive coverage. However, Meta did not escape negative media scrutiny.
The media fallout from a failed M&A is asymmetric, distinctly favoring the acquiring entities over their targets:
Likewise, while failed M&As inevitably correlate with heightened negative media coverage, the repercussions of such negativity disproportionately impact the target of the M&A.
As larger acquiring companies earn a wider stream of media attention, it seems to dilute the negative coverage they attract:
Overall, antitrust regulator claims and failed M&As can inflict damage on a company’s corporate reputation, carrying consequences such as forced breakups, blocked transactions, and substantial monetary penalties.
In the face of such challenges, there is no quick fix, but companies can employ effective, timely, and sustained communications to counter damaging allegations and mitigate concerns.