Feature

A boom in mergers and acquisitions

“Is it just me, or has there been an abundance of mega-merger announcements lately?”

Paula Dwyer
Bloomberg.com

“Is it just me, or has there been an abundance of mega-merger announcements lately?” said Paula Dwyer. Last week, Berkshire Hathaway announced it would partner with a Brazilian private equity firm to snap up H.J. Heinz Co., the ketchup maker, for $23 billion. The news follows other big deals, such as the $11 billion merger between American Airlines and US Airways, the $24 billion private buyout for Dell, and Comcast’s purchase of General Electric’s stake in NBCUniversal for $16.7 billion. “Is there something in the water?” No, but there is something in the bank. “Companies are sitting on mountains of cash.” Record-low interest rates mean that money earns little, while it’s cheap to borrow more to finance big deals. “A herd mentality is also at work.” Emulating Warren Buffett is a frequent temptation for CEOs, and rising stock prices encourage companies “to pounce on an attractive target before someone else does.” Add the many signs that the economy is finally on the mend and you’ve got a recipe for corporate confidence “that a multibillion-dollar wager will pay off.”

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