Merger mania: It's back
“Mergers Return, in '90s Shadow” according to a story in the June 23 Wall Street Journal. The story goes on to say that the rate of mergers and acquisitions is on the uptick, after a slowdown due to the crash of a few years ago.
Of course, the slowdown in mergers was relative. Several key mergers have gone through in the past few years, but they can't compare to the frenzy of the late 1990s. The big difference, the article points out, as that companies are now taking their time, going due diligence in depth, after so many deal went sour. Also the article states that the risks are being limited, with fewer supoer big deals.
The article then lists a number of newly announced mergers, including:
- General Dynamic buying Veridian for $1.2 billion, covered here
- Credit card services company First Data plans to buy rival Concord EFS for $7 billion
- United Technologies bought Chubb PLC for $1 billion
- WellPoint Health Networks, an insurer, bought up regional insurer Cobalt Corp. for $900 million
- American Express is buying British Threadneedle Asset Management Holdings for $570 million.
In the same issue, another article notes that big banks, having digested their last meals, are setting up for more acquisitions. As stated in the article, “G. Kennedy Thompson, chairman and chief executive office of Wachovia Corp., recently opined to investors that 'a handful of national banks' is likely to emerge in the coming, and he expressed a desire to be one of them.'” Needless to say, Wachovia (which recently gobbled up First Union Bank) is already one of them.
The article states that the merger mania in the banking industry hit its last high point in 1998, when 10 big acquisitions cost more than $150 billion. The most frequently mentioned acquirers, according to the article, for the next round include Citigroup, Wachovia, Wells Fargo, Bank of America, and Bank One. Among the regional banks mentioned as possible targets include PNC Bank (Pittsburgh), Fleet Bank (Boston), Comerica (Detroit), KeyCorp (Cleveland) and U.S. Bancorp (Minneapolis).
The banking industry is steadily concentrating in the U.S., and a slight lag due to uncertain economic times seems to be coming t an end. The big players are about to fill in the gaps in the map, and become even more dominant. [Oligopoly Watch]