advertisement
advertisement

They Bought WHAT? 10 Surprising Acquisitions

A candy company that buys a dog-food brand might seem like it’s barking up the wrong tree. But these curious moves would prove prescient.

They Bought WHAT? 10 Surprising Acquisitions
Illustration: Rami Niemi

Companies acquire other firms every day, usually to get their hands on a complementary technology, product, or person. (See Walmart’s $3 billion grab for retail startup Jet.com last fall—which came with CEO Marc Lore, who now heads up all of Walmart’s e-commerce—and its recent purchase of fashion startup ModCloth.) Every now and then, however, well-known brands make deals that appear to be head scratchers, but somehow still pay off in the end. Here are 10 such acquisitions.

advertisement

1. Mars And Chappell Brothers, 1935

In an early example of portfolio diversification, the Snickers maker acquired Chappell Brothers, which manufactured a decidedly less-craveable comestible: Chappie canned dog food.

Why it was smart: Today, the majority of Mars’s business comes not from treats like M&M’s, but from pet brands such as Pedigree and Whiskas.

2. Tandy And RadioShack, 1963

Texas-based shoe-leather supplier Tandy purchased a flailing Boston radio-parts chain. With RadioShack as a launchpad, Tandy became an early player in the personal computer boom.

Why it was smart: It turned out to be a good fit: CEO Charles Tandy grew RadioShack into an electronics powerhouse.

3. General Mills And Play-Doh, 1965

Seeing synergies between kid-focused foods and the toy market, General Mills snatched up Play-Doh maker Rainbow Crafts. That paved the way for its purchase of Kenner toys two years later.

Why it was smart: General Mills soon merged Rainbow and Kenner, and a bet on licensing Star Wars toys paid off big after the 1977 film blew up.

advertisement

4. Getty Oil And ESPN, 1979

Getty Oil spent $10 million on an 85% stake in what was then known as the ESP Network, a little-watched 24-hour satellite sports channel.

Why it was smart: Cable TV soon grew into a massive business, with ESPN as one of the medium’s major anchors, and ABC purchased the network in 1984 for around $200 million.

5. Turner And MGM, 1986

When cable upstart Ted Turner bought storied studio Metro-Goldwyn-Mayer, home of such classics as The Wizard of Oz, it was jarring evidence of a fast-changing media landscape.

Why it was smart: Turner tapped MGM’s library when he launched movie-oriented channels TCM and TNT, which helped expand his media empire.

6. Starbucks And Hear Music, 1999

The coffee chain purchased a small San Francisco–based music retailer and record label, broadening its in-store offerings beyond food and beverage with exclusive albums.

Why it was smart: The move helped cement Starbucks’s image as a lifestyle brand—a “third place” between home and work.

advertisement

7. Coca-Cola And Odwalla, 2001

Coca-Cola poured $181 million into a deal to purchase California juice maker Odwalla, which had cultivated an image as a healthier alternative to soft drinks.

Why it was smart: Coca-Cola has used Odwalla and brands such as Honest Tea to help fill the gap from slipping soda sales.

8. Clorox And Burt’s Bees, 2007

Best known for peddling bleach, Clorox created buzz when it bought Burt’s Bees, a Maine-based purveyor of natural personal-care products.

Why it was smart: Burt’s Bees helped the company tap into the eco-products market: Clorox soon launched Green Works, a line of natural household cleaners.

9. Apple And P.A. Semi, 2008

Steve Jobs quietly paid a relatively small $278 million for a tiny maker of low-power chips. The move let Apple start designing the cores of its products rather than relying on Intel.

Why it was smart: Controlling its own chips proved crucial as Apple developed products such as the Apple Watch, iPhone 7, and AirPods.

advertisement

10. Facebook And Oculus, 2014

Virtual reality was virtually irrelevant when Facebook spent $2 billion to buy the Oculus Rift.

Why it was smart: Though VR sales have been slow, the Oculus deal set off a tech race—from Microsoft to HTC to Samsung—and established Facebook as a bona fide hardware player and leader in a new computing interface.

About the author

J.J. McCorvey is a staff writer for Fast Company, where he covers business and technology.

More

Video