Big companies first bought small companies at high prices and now the situation has come to such a pass that they are selling the same companies at low prices and running away. The companies that have made the acquisition are facing huge losses, but selling is also a compulsion. This happens when companies fail to strike a balance between their strategy and the reality of the market. Overall, it can be said that big lallas (business groups) first bought goods at the price of almonds and now are running away to save their lives by selling them at the price of peanuts.

According to a report by CNBC TV18, Alibaba Group Holding Limited is a big Chinese company. It is also listed on the US stock market. It recently announced that it is selling Chinese department store chain Intime for $1 billion. This price is 30% less than the valuation when Alibaba bought it in 2017. Alibaba is facing a loss of $1.3 billion due to this deal.

Loss of up to 90 percent
Similarly, BlackBerry Limited has also announced that it is selling its Cylance endpoint security to a software startup called Arctic Wolf for $160 million. This price is much less than the $1.4 billion that BlackBerry paid to buy this unit in 2018. According to analysts at Royal Bank of Canada, Cylance suffered huge losses under BlackBerry's ownership and its revenue declined by more than 50 percent.

It was last month that Just Eat Takeaway.com NV agreed to sell US food delivery service Grubhub for $650 million, 90 per cent more than what it paid to buy the business at the peak of the Covid pandemic.

Why are losses occurring?
Experts believe that companies did not correctly assess the potential benefits and synergies in these deals. Due to extreme competition and low interest rates during the pandemic, companies paid higher prices. The result of which is now coming in the form of losses.

In these circumstances, companies are selling their failed acquisitions to focus on their core business. Alibaba is now busy promoting its Chinese e-commerce division, as it faces tough competition from PDD Holdings and ByteDance. BlackBerry has started focusing on its Internet of Things and secure communication platforms.

It is a different matter that at present the market of acquisitions and mergers is becoming active again. This year it has reached 3.2 trillion dollars (about Rs 2,62,40,000 crores). Experts believe that this pace may increase further next year.