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But it didn't last long. The Dow Jones industrial average backed off its positive opening within minutes today, following reports that telecom equipment maker Lucent Technologies was once again dallying with French equipment company Alcatel. The report follows hard on the heels of the proposed $67 billion merger between AT&T Corp. and BellSouth. The planned tie-up of the two U.S. phone giants is expected to lead to further consolidation in the telecommunications industry, with suppliers in particular playing the dating game.
Then there were reports that the board of Schering AG had accepted a $19.5 billion merger offer from fellow German pharmaceutical firm Bayer AG, thwarting another offer from Merck KgaA. The deal seemed further evidence that the wave of merger and acquisition activity in the United States and Europe would continue.
The deals come fast and furious despite repeated academic and anecdotal evidence that they rarely work. Think AOL-Time Warner.
Still, there are plenty of dollars that get spread around among the deal makers, principally the investment bankers who peddle the deals. That gooses their earnings and makes traders and bankers on Wall Street even flusher than they already were.
And just imagine how much more money they can make once the deals prove unworkable: Then the deal makers get a second shot at the trough as they dismember the combined companies.
