Mergers and acquisitions can do a lot of great things for companies: increase market share, improve economies of scale, and increase revenue, for example. But sometimes the initial phase of this lucrative joining-at-the-hip brings hardship, and our dividends are often the first cutback. Hopefully, after the ink has dried and the dust has cleared, companies restore their dividends. Let's look at some examples from two key sectors to get a better sense of when dividends go bad and what it takes to bring them back.
When Coors merged with Molson in 2005 to create MolsonCoors Brewing
Anheuser Busch InBev
It seems odd to even mention Frontier Communications
On the flip side of the coin, Verizon recently completed an acquisition of its own, picking up cloud infrastructure leader Terremark for $1.4 billion in April. The telecom giant maintained its dividend payment in July, and management has gone on record with its commitment to dividend payments. Historically, annual increases have come in October, so we'll have to wait a bit longer to see for certain if this acquisition has any affect on payout.
Companies have the best intentions when it comes to mergers and acquisitions, but some are in better positions than others to navigate the storm than others. When it comes to our dividends, M&A should always raise a flag and spark some research.
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