Gavin Baker+ Your Authors @GavinSBaker Husband, Becky Painter. CIO, Atreides Management. Former PM, Fidelity OTC fund. investorfieldguide.com/baker/ No investment advice, views all my own. May. 12, 2019 2 min read + Your Authors

1) For no reason at all, my ordinal ranking of the 5 best TMT acquisitions over the last 20 years from both a financial and strategic perspective. 1) $BKNG  http://Booking.com  2) $GOOGL Android. 3) $FB Instagram. 4) $GOOGL Youtube. 5) $DIS Marvel.

2) Priceline bought  http://Booking.com  for $135m in cash in July 2005. Today,  http://Booking.com  accounts for north of 85% of $BKNG’s $80b market cap. So roughly a 500x increase in value and the company would likely not exist today absent this acquisition.

3) $GOOGL buying Android for $50m in July 2005. Ex this, suspect $AAPL would be 2-3xish larger today. Difficult to imagine any of the other competitors - or Android alone - succeeding. In this case, sites TAC would be 1.5x-2.5xish higher & the stock would be 30-50%ish lower.

4) So Android was a 4800 to 8000xish increase in value for $GOOGL & likely the best acquisition ever from this perspective, but much less existential for $GOOGL than Priceline’s acquisition of  http://Booking.com .

5) BTW – obviously wide variance around the estimated increase in value! Goldman estimated $12b in 2019 TAC to $AAPL – doubling this to $24b would cut EBIT by more than $35%. Simple, crude analysis that I look forward to having refined by Twitter.

6) $FB buying Instagram for $1b in April 2012. $FB would likely be a sub $100 stock without IG given engagement trends at the core Facebook app and consequent multiple compression, so 200-250xish increase in value.

Funny to remember the criticism of $FB at the time!

7) $GOOGL buying Youtube for $1.65b in October, 2006. Up 75x-150x in value, but not nearly as strategically/existentially important as the  http://Booking.com , Android or Instagram acq’s.

Also funny to remember the criticism of $GOOGL at the time.

8) Incidentally, I think hitting it out of the park with Android and Youtube has paralyzed $GOOGL BD. It feels like they don’t want to risk ruining their track record and have been very risk averse when it comes to large acquisitions over the last 5-7 years. Slack!

9) And at #5, $DIS buying Marvel for $4.25b in August, 2009. At best a 10-25x and while of critical strategic importance, it is not as existentially important to $DIS as  http://Booking.com , Android and Instagram although more important than Youtube.

10) No idea why I wrote this up on a Sunday morning other than having recently read comparisons of $DIS buying Marvel to $FB buying Instagram, which got me thinking.

Interesting that 4 of the 5 best acquisitions (IMHO) were either ignored or widely mocked and criticized.

11) $AMZN buying Twitch would be the runner up btw. While likely financially better than Marvel, not nearly as strategically important to $AMZN.

Curious if I missed any really great acquisitions that should've been on this list.


You can follow @GavinSBaker.



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