Global Policy Forum

By John Cunniff

You may have noticed that the excitement and activity in the marketplace these days isn't just because of consumers and their desire to earn, buy and spend. Businesses are doing something of the sort in a somewhat bigger way, buying other companies, merging, creating alliances, trading with each other. At times, it seems, everyone is hunter or hunted.

And we're not talking about a few thousand dollars, as in most consumer purchases. Or millions either. Chase Manhattan last week proposed to take over J.P. Morgan for more than $30 billion. Figures like that mount up to serious sums when repeated over and over. To date, $1.32 trillion of mergers and acquisitions have taken place this year in 7,405 transactions.

Those numbers, says Thomson Financial Securities Data, are for just the United States. But this kind of business isn't just a U.S. phenomenon. Worldwide, the total is $3.4 trillion in 33,700 deals. Neither does it include the so-called B2B that is recreating the industrial world -- business to business transactions on the Internet in which companies order items one from the other.

It doesn't include outsourcing either. Don't waste your time and effort making all the parts for your product, management gurus tell manufacturers. Contract to have offsite specialists do it for you.

These trends are not about to slow. After Chase and J.P. Morgan made their announcement last Wednesday, speculation arose about other big-name securities firms, such as Lehman Brothers, Bear Stearns, Merrill Lynch and Goldman Sachs. Donaldson, Lufkin & Jenrette would have been among that group except that it sold itself a couple of weeks ago to Credit Suisse First Boston for $11.5 billion. Earlier, UBS AG announced it wished to buy PaineWebber for about $10 billion.

By no means has such activity over recent years been limited to banks and securities firms, as indicated by DaimlerChrysler Corp., the current name of the automaker that used to be just Chrysler. In recent years, General Motors and Fiat have joined forces. So have Subaru and Saab, Ford and Mazda, Ford and Volvo, and Nissan and Renault. DaimlerChrysler also bought control of Mitsubishi Motors.

Combined with an already explosive stock market, this merger and acquisition activity has become a speculator's dream, and some stock analysts specialize in ferreting out potential candidates. Why, the idea of making a run on General Motors has even been discussed.

And by no means, either, is the activity limited to giant firms. In today's world of technology and entrepreneurship, some of the most desirable acquisitions are of small, smart, swift-growing companies. New ideas and creative thinking carry huge price tags.

Not all these alliances result in marriage. Large companies such as Sun Microsystems, Oracle and Qualcomm often provide financial aid to smaller companies developing mutually beneficial products. At least two explosive dynamics assure that it will not slow down soon: 1. The still developing global economy in which large size counts, and 2. The energetic growth of technology, which demands the very latest.

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C íŸ 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.