Look Out Below
Kevin Salwen on Business
Some fascinating info in the latest Time magazine about the stock market's reaction post-mega-merger.
'Blockbuster mergers tend to be duds for stockholders of the acquiring company. In seven of the nine mergers valued at more than $50 billion, the acquirer's share price is down an average of 46% from premerger levels, according to FactSet Mergerstat, a research firm in Santa Monica, Calif. Maybe you already knew that if you're a longtime owner of Hewlett-Packard, whose stock has flatlined since the company acquired Compaq in 2002. AOL's merger with Time Warner may have set a new standard of paired futility, erasing some 80% of the merged company's stock value. After the hype subsides, more often than not, investors wind up with tax write-offs.'
Fascinating stuff, especially in light of P&G's planned acquisition of Gillette for -- you guessed it -- $57 billion. If you're a P&G shareholder, you might consider a money-market fund.
(Thanks to Tom Peters for the link.)