Tuesday, February 19, 2013

More value to whom?

M&A deals lift shares, suggest more value in market

The question should be, more value to whom?  Just because one company finds value in merging with a competitor doesn't mean investors should find the same value in either company.  Of course, in most cases it would be nice to see the value in the target to the acquirer before the acquirer does since that would definitely benefit the investor, but then, you could wait for years for the acquirer to recognize the value.  No, I think M&A action really is more of an indication that companies are less competitive and see this a some sort of solution, which it is in the short run.  In the long run, though, new competitors will enter the market, and these companies will still be unable to compete.

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