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Merger Monday has taken on a new meaning recently, as more and more companies place bids to acquire or merge with others.  Disney acquired Marvel Entertainment, Kraft is bidding for Cadbury and two of the United Kingdom’s largest phone operators, T-Mobile and Orange, are joining forces...all in the first days of September.

We’re looking at media perspectives on why M and A’s are up and what that means for consumers and the global economy.  We’ve got insight from the BBC, Fox News Business, CNBC, Business Week, CNN, The Guardian and The New York Times.

The BBC Business Editor says in his blog that the incentive for mergers and acquisitions is more cash flow.

 

“To generate incremental profits, the focus has to be on reducing costs.  And one of the best ways of doing that is to marry a similar business and remove overlapping activities.”

But a commentator on FOX News Business implies that mergers and acquisitions may also reduce the number of choices for consumers.  Take Kraft’s bid for Cadbury...

“Will this become a company that will be potentially the largest food confectioner company in the world, rivaling perhaps Mars, which bought Wrigley.  You know, Wrigley gum?”

A CNBC commentator adds another reason why mergers and acquisitions are significant to consumers and the economy.


“Well, they help fuel confidence.  They of course impart values to the market and they are just generally seen as good business, certainly for Wall Street as well.”

And Business Week reports how Wall Street is benefiting from investors whose faith in the market has grown, thanks to M and A’s.

“Stocks were trading higher Tuesday morning as a rekindling of merger and acquisition activity and steep gains in commodity prices bolster investors' enthusiasm.”

But CNN reporter explains why there’s still reason to worry.

“The US dollar falling to a new low for the year against the Euro.”

“Finance ministers from the group of 20 leading economies say that a global economy is not sustainable without continued government help.”


And The Guardian adds a perspective from critics of M and A’s into the discussion, who say M and A’s aren’t always beneficial.

“First of all it demonstrates the need for companies to slash costs to offset global competition which makes it difficult for firms to raise prices…Second, getting bigger has never been a panacea for business with numerous academic studies showing that most mergers fail to deliver value for shareholders.”

Still, the BBC reports that more M and A’s are expected.

CNBC analysts anticipate that Palm and Dell are two companies that may consider M and A shortly.

While AP reports that recent mergers are a sign of a growing economy, a New York Times blog adds that the growth is likely to be slow.

“What lies in store is mostly expected to be more of what has transpired this year: opportunistic purchases by corporations with healthy credit ratings, stock values and cash.”

How do mergers and acquisitions affect your confidence in the economy?  What mergers are next?

Business News

Business Keeps Getting Bigger

September 10, 2009
(2:59)
Mergers and acquisitions are up, but what does that mean for consumers? For the greater economy? They're a confidence boost for some, and a warning sign for others.
   
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