Mergers end in a fudge

In the best M&A deals, a clever bidder takes over an underperforming company.

by Patience Wheatcroft, business and City editor of The Times

Investment bankers have had a good year and they expect the next one to be even better. The wave of cross-border mergers and acquisitions that has been talked about for so long has actually begun to happen. The French government has noticed the trend, to the extent that it has been prompted to draw up a list of the industries in which it would not countenance a takeover from overseas.

It is not comprehensive, omitting to mention that the manufacture of yoghurt was to be protected from foreign predators, but the vigour of the response to PepsiCo's mooted interest in Danone is testimony to the fact that the Elysee Palace has sensed that a corporate buying spree is gathering steam.

Britain has long given up the principle of local. The City was quick to succumb to foreign bidders and was then hardly likely to discourage the sale of much of corporate Britain. Yet, apart from those who collect the fees for making the deals, few would contend that acquisitions generally enhance shareholder value.

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