M&A 2002

Doomwatch^TM vs. Timesizing^®

Mergers&Acquisitions - 2002

12/31/2002 our takeover tracking has narrowed to biggies, blasts, setbacks & summaries-

With final kick, Europe eclipses U.S. in 'big merger race' [our quotes - ed.], by Anita Raghavan, WSJ, C1.
[Another 'race to the bottom,' where bored CEOs frustrated by declining markets neglect real market-share building by just buying it and plunging their companies into megadebt to do so. Europe seems to be nervous about the homogenization of US industry, which it mistakes for integrated strength, and it doesn't have the balls to forge a new path of strength in diversity.]
...Mergers and acquisitions [M&As] involving European targets totaled about $477.8B this year, eclipsing US mergers for the first time since 1991, according to preliminary data from Thomson Financial.... Though deals in Europe slipped 9.8% from 2001, the volume still was 7% more than in the US, which is expected to end the year with about $446.5B in mergers, a sharp 41% drop from 2001 and its lowest level since 1994....
Driving the divergence was a raft of business scandals that engulfed well-known US companies, including Enron..., WorldCom...and Tyco...and helped sap appetite to do deals....
[Or rather diverted sloppy US CEOs from one form of cheating (their M&A shortcut to market share) to clean up their other main form of cheating (their cooked books).]

12/20/2002 our takeover tracking has narrowed to biggies, blasts & setbacks -

[here's a particularly bad one]
UnionBancal, NYT, C4.
...San Francisco, Calif.'s 3rd-largest bank [has] agreed to buy closely held John Burnham & Co., San Diego, a commercial insurance broker....
[This one directly violates the hard-learned Glass-Steagall Act of the 1930s which separated banking, brokerage and insurance, an Act that was recently, and stupidly, repealed, thus reopening the door to all kinds of conflict of interest at a time when corporate corruption in America is already rife and dampening the stock markets and the economy. Dumb dumb dumb.]

12/11/2002 our takeover tracking has narrowed to biggies, blasts & setbacks -

EU antitrust chief to unveil changes to merger rules - EU merger rules to be eased, by Philip Shishkin, WSJ, A15.
[The EU pounds another nail in its coffin.]
BRUSSELS - Companies doing deals that affect the European market will soon face more-flexible antitrust rules, giving them a better chance to defend their mergers and acquisitions. Mario Monti, the EU's top antitrust regulator, will today present the biggest changes Europe's merger-review practice has undertaken in its 13-year history....
[They flex up rules that for the survival of their foundational consumer markets should be stricter, since mergers simply function as preliminaries to downsizing, and are oblivious to rigidities that for the sake of their own markets should be eased, like the downward inflexibility of working hours per person per week.]

11/01/2002 our takeover tracking has narrowed to biggies, blasts & setbacks, like these 2 (the 2nd between banks) -

U.S. and states sue on satellite TV merger - Argue that an EchoStar-DirecTV deal would limit competition - 2 companies are now likely to end their push for approval, by Andrew Sorkin & Seth Schiesel, NYT, C4.
Error by BB&T puts acquisition plan in doubt, Bloomberg via NYT, C4.
BB&T [Winston-Salem NC] was forced to cancel a plan to buy FloridaFirst Bancorp Inc. [Lakeland FL], another southeastern bank, for $134.8m, because of a procedural error that violated federal regulations.... BB&T said it believed a waiting period required by the office had expired when it made its original bid on Oct. 3....
[BB&T is the Tyco of southeastern banking - a voracious spider more interested in merging than banking.]

10/31/2002 narrowing takeover tracking to biggies, banks & blasts, like this combo -

[some possible good news -]
Canada's Manley denies merger ban, WSJ, A17.
Canadian Finance Minister John Manley said there is no ban on bank mergers, noting last year's Bank Act revisions left the door open to such unions but that so far no bank had sought his blessing. But Canadian bank shares fell for the second session in a row, following a report Tuesday in the [Toronto] Globe & Mail newspaper that said PM Jean Chretien's office had intervened to halt a proposed merger of Bank of Montreal and Bank of Nova Scotia. "There's no such ban," Mr. Manley said after a parliamentary committee hearing in Halifax, NS....

10/29/2002 narrowing takeover tracking to biggies, banks, & blasts, like these, blasts first -

Steve Case muses about spinning off AOL unit from Time Warner, by Peers & Angwin, WSJ, front page.
[Wait a minute. Didn't those clowns just merge? Apparently there have been...]
...Months of complaints from AOL Time Warner Inc. executives and investors that the America Online division is a drag on the company....
Qwest sets billions in charges related to goodwill value, Dow Jones via WSJ, A18.
DENVER - Qwest Communications International Inc. will take a goodwill-impairment charge of about $24B, as the Baby Bell has completed an accounting review as called for by new accounting rules.... Many companies are facing huge goodwill write-downs after paying large premiums for acquisitions....
Prudential-Wachovia talks end, by Mollenkamp & Craig, WSJ, C3.
Talks between Prudential Financial Inc. and Wachovia Corp. to launch a joint venture merging their brokerage operations have collapsed, according to people familiar with the matter....
[and today's ominous banking merger can be found on our banking page by scanning down to 10/29/2002]

10/26/2002 no downsizings in WSJ or NYT today (despite 3 downsizings in Boston regional papers), but...
1 layoff-inducing takeover, totaling $$undisclosed -

Flowers Foods Inc., NYT, B4.
...Thomasville, Ga., a maker of bakery and dessert products, acquired Ideal Baking Co., Batesville, Ark., a family-owned bakery with annual sales of $15m....

10/16/2002 no downsizings in WSJ or NYT today (despite Boston Globe's "Sun seen set to lay off up to 8,000 employees," by Chris Gaither, BG, C1, and "Delta reports loss of $326m," by Nicole Harris, WSJ A2, which says, "Delta...plans to announce more jobcuts in the coming weeks"), but...
5 layoff-inducing takeovers, totaling $393m -

RF Micro Devices to acquire Resonext Communications [for $133m], WSJ, D12.
Kraft Foods Inc. [to sell its Fleischmann's Latin American yeast & industrial bakery unit to Burns Philp {sic} for $110m], NYT, C4.
SPX buys Vance International for $67m, Bloomberg via NYT, C4.
Invitrogen to acquire InforMax [for $42m], WSJ, D2.
Temple-Inland Inc. [to sell Mid-American Packaging and Pine Bluff, Ark., papermill to undisclosed buyer for $41m], NYT, C4.

10/11/2002 tapering takeover tracking to biggies, banks, & blasts, like this one -

F.C.C. blocks EchoStar deal with DirecTV - Says satellite merger isn't in public interest, by Stephen Labaton, NYT, C1.
[Finally, the FCC does its job.]

10/01/2002 tapering takeover tracking to biggies, banks, blasts, & BGOs, like this one -

M&A activity can't shake doldrums, by Robert Frank, WSJ, C14.
[Thank God for that! Mergers and acquisitions are hors d'oeuvres for downsizing.]
...The number of deals globally [in Q3?] fell 16% to 5,577, down from 6,904 deals last year..\.. The value of worldwide merger deals in Q3 fell 37% during the past year, to $283.6B from $448.2B in 2001, according to Thomson Financial. The total value of deals is down more than 70% from the peak quarters of 2000 and hit the lowest level since 3Q96....
The U.S. fared even worse.
[We would say better, since this means less downsizing of the US workforce and consumer base.]
...There were only 1,614 deals in the U.S. in Q3, down from 1,629 in 3Q01..\.. The value of US deals fell 42% to $144.3B from $247.6B last year.

9/29/2002 tapering takeover tracking to biggies, banks, blasts, & BGOs,* like this one -

Market insight - For sellers of food, fewer chairs at the table -
Competitive pressures and slowing volume encourage mergers, by Kenneth Gilpin, NYT, 3-7.
[Bingo. And not just in the food industry but in all industries.
(* BGOs = blinding glimpses of the obvious)]
The big companies that sell much of the food that Americans eat...in the last couple of years...have been gobbling up one another. The consolidation trend was at least temporarily halted this month, when Hershey Foods rebuffed an...offer from the Wm. Wrigley Jr. Co.
Jaine Mehring, an analyst at Salomon Smith Barney, talked last week....
Q. What is the logic behind consolidation in the food industry?
A. Normalized earnings-per-share growth is about 7 or 8%, but most companies would still tell you they are shooting for 8-10%. When I started covering the group 5 years ago, every chief executive told me it was 13-15%. Some companies have merged for cost savings to put more money into things like promotion....
Q. Is the food business becoming an oligopoly?
...The top 10 beverage manufacturers have more than 80% of [their] market, as do the top 10 household products companies. The top 10 supermarket chains have more than 50% of that market. But the 10 biggest food companies have a market share of [only] about 20%. It is still an incredibly fragmented industry....
[Maybe that's why there are still so many jobs in the food industry, if only "McJobs."]

9/25/2002 tapering takeover tracking to biggies, banks & blasts, like this second piece of unusual good news -

Germany is expected to again fight an EU attempt to make corporate takeovers easier, pointer summary (to A11), WSJ, front page.
[pointing to -]
Berlin to oppose EU's latest effort on takeover rules - Financial "experts" assert "reform" is needed to make Europe's economy grow [our quotes - ed.], by Paul Hofheinz, WSJ, A11.
[There's good growth, and there's bad growth, of a sort that undermines itself.]
...The latest proposal for a takeover law suggests that limits on shareholder-voting rights - like those that protect Volkswagen AG from hostile bids - should be banned in the European Union, according to a draft of the proposal. Germany opposed and ultimately killed the EU's last takeover effort because it threatened Germany's so-called Volkswagen law, which recently re-elected Chancellor Gerhard Schroeder pledged to protect.
[Just as "constant vigilance is the price of liberty," constant vigilance is the price of prosperity. Idee-fixe obsessives still want to privatize Social Security even though the stock market has deflated, the IMF and World Bank still want to adminster shock therapy to Brazil and Argentina even though it devastated Russia and resistance to it saved China, and now gnomes wormed into the EU's innards want to "fix something that ain't broke" - Volkswagen - no matter how inconsistent their proposal -]
German politicians said yesterday that they will continue to oppose any proposal that would ban the antitakeover defense popular in Germany but that would allow other countries to keep in place other defense tactics, such as multiple-voting rights. "Attacking voting caps without attacking multiple-voting rights is a bit nonsensical," said Vincent Brophy, a corporate lawyer at Linklaters law firm in Brussels.... The latest draft says holders of shares with multiple-voting rights would be able to keep them. These shares - common in the U.S. and legal in most EU countries but not in Germany - can give the holder a majority of votes even if he owns only a minority of shares....
[Again we see the great and lordly USA (now via puppydog EU) saying, "Do as I say and not as I do - my way or the highway." Germany seems to be playing a vital role in two "playgrounds" these days, opposing Bush's inconsistent and destabilizing strike-first policy on Iraq and opposing the EU's inconsistent and de-sustainabilizing attempt to zap Germany's takeover defense but no one else's. Never thought us anglophiles would be saying this but, Three cheers for Deutschland! (and Tony Blair, siddown & shaddap.)]

9/20/2002 tapering takeover tracking to biggies, banks & blasts, like this unusual piece of good news -

The deal drought, by Kyle Pope, WSJ, C5.
When it comes to mergers these days, acquirers are playing it safe. The bad news for investment banks is that means the deal flow is puny, resulting in a 45% drop in US merger volume so far this year....

8/31/2002 tapering takeover tracking to biggies, banks & blasts, like these babies -

Phillips, Conoco merger OK'd - $15.1B deal clears the FTC, by David Ho, AP via Arizona Republic, D1.
...to create the 3rd-largest US oil and gas company after...Exxon Mobil...and ChevronTexaco..\..
["Anti-trust" - what's that??? We're right back where we were in 1902 just before McKinley took a bullet and Teddy Roosevelt had to take on ... the big oil trusts. We have learned zero, zilch, nada, nihil, nothing, nil from history, so we are doomed to repeat it.]
The deal creates the world's 6th-largest oil and gas company....
[bank mergers in the 1920s were one of the big lead-ins to the Great Depression]
Royal Bank of Canada unit to buy Admiralty Bancorp for $150m, Reuters via NYT, B2.
...a deal that will give the Canadian bank a presence in southern and central Florida....
[Trying to recapture the business of Canadian retirees in Florida? - Dumb. The U.S. in general (and Florida in particular) is leading the global economic deterioration with excessive workweeks, labor glut, wage stagnation, income concentration and shrinking markets.]
The Royal Bank unit, RBC Centura of Rocky Mount, NC, [is] Royal's retail arm in the U.S..\.. The transaction [is] the latest in Royal's quest to expand in the U.S.... "Acquiring Admiralty Bancorp is a significant step toward our goal of creating a leading North American financial services organization," said Jim Rager, head of Royal's personal and commercial banking business.
[They've already got a leading N.A. financial services organization. They're just expanding their risks and unwieldiness. Executives who can think of no other way to grow their company than the invalid acquisition cornercut should just quit and apply for a job at the other company, or some other bigger company, and quit thinking of ruining the one they're at with debt-laden and economic diversity-bashing takeovers. Real managers don't do takeovers.]
Admiralty, which is based in Palm Beach Gardens, Fla., owns and operates Admiralty Bank, which offers personal and commercial banking services. Its 10 branches will become part of RBC Centura.... Admiralty, with assets of $578m [they must mean deposits, else Admiralty could not be bought for only $150m], employs about 120 people and holds about 17,500 accounts....

8/29/2002 tapering takeover tracking to biggies & blasts, like this baby -

Washington Mutual acquires Homeside Lending for nearly $1.3B - Thrift buys operations from National Australia, which exits U.S. market, by Calmetta Coleman, WSJ, A2.
[Great. A biggy between banks. Just like the 1920s. We're toast.]

8/28/2002 tapering takeover tracking to biggies & blasts, like this baby -

H-P posts big loss [$2.03B fiscal Q3 net] due to Compaq purchase, by Pui-wing Tam, WSJ, A6.

8/22/2002 tapering takeover tracking to biggies & blasts, like this baby -

HSBC to acquire Bital to increase Mexican presence, WSJ, A3.
...Grupo Fiinanciero Bital SA, Mexico's 5th-largest bank in terms of assets, for as much as $1.14B....

8/8/2002 tapering takeover tracking to blasts & biggies, like this self-immolation -

For WorldCom, acquisitions were behind its rise and fall - WorldCom hunger for acquisitions is cited in its fall, by Kurt Eichenwald, NYT, front page & C6.

7/31/2002 tapering takeover tracking to blasts & biggies, like these 2 megadoses of 'auto-kevork' -

I.B.M. to purchase consulting group [PricewaterhouseCoopers Consulting] for $3.5B - Part of a strategy shift - Company's acquisition...could broaden services, by Lohr & Glater, NYT, front page.
Guidant to buy Cook Group [for $3B], advancing coated-stent goal, by Amy Merrick, WSJ, A3.

7/20/2002 tapering takeover tracking to biggies & blasts, like this one -

The AOL Time Warner shuffle, editorial, NYT, A24.
...Of all the giddy moves of the 1990's, none now looks more wrongheaded that Time Warner's decision to sell itself to AOL in a deal thata put a higher value on the now-struggling Internet service than on Time Warner's vast stable of blue-chip media properties....
The fast-growing AOL online service was supposed to be the juggernaut that would cause the whole company to grow at 30% a year. It turned out that -
- AOL was unable to sustain its own growth rate, much less carry the rest of the merged companies....
- The stock has plummeted.
- In January, management was forced to announce a $54B good will writedown, a stunning admission of just how bad things had gotten....
Before anyone gets too excited about the [supposedly curative] restoration of Time Warner culture, it is worth remembering that it was Time Warner management that blundered into the AOL deal in the first place.

7/17/2002 tapering takeover tracking to biggies & blasts, like this one -

Mergers won't cure diseases, by Scott Gottlieb, WSJ, A16.
Pharmacia's scientists were probably sweating into their beakers Monday as they contemplated a future with Pfizer.... These kinds of mergers are not going to help companies capitalize on innovations in medicine....

7/15/2002 sharply tapering takeover tracking to just the biggies -

Pfizer said to buy large drug rival in $60B deal - Faces regulatory review - Merger with Pharmacia would make it dominant in field - $48b in sales, by Andrew Sorkin, NYT, front page.

5/27/2002 tapering off tracking takeovers - we realize we're missing a certain number of downsizings by dropping daily takeover tracking, because oftentimes downsizing news is buried in takeover stories -

Marketplace - As Jupiter crumbles, its pieces may help build a new order of Web researchers, by Saul Hansell, NYT, C7.
...Jupiter Media Metrix, which is based in New York and was formed by the 2000 merger of Media Metrix and Jupiter Communications, is running out of cash as its business atrophies....
In retrospect, the merger hastened the company's decline by reinforcing its dependence on dot-com clients and Internet-oriented services. The year it spend combining two dissimilar cultures could have been used by each of its component companies to diversify their revenues and batten down the hatches as the storm clouds [of the dot-com meltdown] massed....
[Two more CEOs who should have been managing, not merging.]

1/03/2002 tapering off tracking - 12 takeovers, worth $524.3m + $undisclosed, reported in (NYT) NY Times & (BG) Boston Globe -

(biggest) Marriott International to sell 8 hotels to CNL Hospitality for $181m, Bloomberg via BG, C5.
[JDSU is turning out to be almost as big a Borg-like engulfer as Tyco.]

1/02/2002 no takeovers reported in NY Times & Boston Globe today, and -
This brings to an end our coverage (see below) of takeovers, mergers and acquisitions ("M&As") - begun on a daily basis from the Boston Globe in mid-January 1999 and additionally - and primarily (by volume) - from the NY Times on June 20, 1999.

Why drop takeover tracking now?
- The mess made by CEOs who mergemergemerge in an attempt to distract everyone from their incompetence as managers is trivialized by the powerful economywide solution offered by Timesizing, and represents an area of potential government regulation that will be rendered unnecessary once a flexible economywide worksharing system (à la some-such-program-as Timesizing) is in place.
- True to Art Dahlberg's intuition about the toxicity of mergers (in his 1932 "Jobs, Machines and Capitalism"), we've tracked 2½ years of this nonsense through a bubble and right into a bust, thus educating our own and readers' instincts about how this rollercoaster feels from the M&A viewpoint. Our one remaining dream in this area is to have a sidecar website where we can track the daily good and bad news, including mergers, from 1928-29 to get the feeling of what decades of perspective have allowed as The Big One - the downside of the business cycle that proved it ain't a cycle - it's an inexorable downward trend interrupted only by militarizations, supplemented in our present case by a boom in prison construction.
Individual economies will want to ban M&As except pre-Chapter-7 to avoid the devastation, but that's something we can't afford to dwell on while so many people are so clueless about the huge and central solution option offered by work sharing. Our strangely testosterone-poisoned friend Carly Fiorina is currently demonstrating the blindness of CEOs touched-in-the-head with merger mania. Compaq was foolish enough to take on the "ball and chain" that was DEC, by then already ruined by almost-monthly reorgs engineered by prancing morons like Robert Palmer. And for HP to take on the albatross-with-ball&chain that Compaq has become would be to shoot themselves in the foot and all the way up the leg to the groin. Carly will never admit it of course. But then, she doesn't want to admit the fact she can't manage HP (so how could she manage HP-Compaq-DEC?) - so her only choice is to distract everyone from her managerial incompetence by fighting for the merger all the way to the wall, thereby prolonging her tenure as top exec. With luck, the merger will be scotched forthwith and she'll be dumped sooner rather than later. With her, HP made a PC (political correctness) motivated exception to hire from outside, and they shouldn't have.

1/1/2002 5 takeovers, worth $833.5m + $undisclosed, reported in (NYT) NY Times & (BG) Boston Globe -

Italy: Brokerage firm Bipop-Carire sells Azimut fund mgmt unit to Apax Partners of Britain for $370m, Bloomberg via NYT, W1.
Ionics sells its Aqua Cool Pure Bottled Water company to Nestle's Perrier-Vittel unit for $220m, Bloomberg via NYT, C3.
American Electric Power buys an Enron wind project in west Texas from an Enron subsidiary for $175m, AP via NYT, C3.
Advent Software, a software maker, buys Kinexus for $68.5m, Bloomberg via NYT, C3.
UnumProvident deal - Its Genex Services subsidiary acquired Resource Opportunities for $??, AP via BG, C4.

For earlier Mergers&Acquisitions, click on the desired date -

For more details, our laypersons' guide to our great economic future Timesizing, Not Downsizing is available at bookstores in Harvard Square, Cambridge, Mass. or from *Amazon.com online.

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