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Most mergers disappoint. So why do firms keep merging?
CRISES come and crises go, but merger waves seem to go on forever. This week, as stockmarkets returned to heady levels, a swathe of big mergers as striking as any from earlier in the year were announced. Beyond the excitement, however, the right question to ask is whether any of the mergers will make long-term sense.
To generalise is, naturally, hazardous: each merger deserves scrutiny on its own merits. Thus this week's British takeover of BTR, a fading conglomerate, by Siebe, an engineering firm, could prove sensible because it offers cost-savings; so, if it happens, might a merger of Exxon and Mobil (see page 64). But the takeover of America's Bankers Trust by Germany's Deutsche Bank, which has already lost a packet in investment banking, looks bad (see page 73). Yet there are...