Wednesday, February 6, 2008

More surprise takeover bids on the way !

Nobody likes to use the 'R' word. The fact is, if you don't use it soon enough, you could be dealing with the 'D' word. Election year or not.

The Fed cut (significantly). The 'not enough' economic stimulus package is still stuck, and unemployment numbers are moving up. Margins are tightening and major companies are beginning to shed middle management salaries. The latest round at Time-Warner being reported by AdAge.

Not gloom and doom (yet). Just time to look at history and do something.

The US economy (in my humble view) has been, and is, in recession. The markets are recognizing it, and as I write this, Japan's Nikkei is sharply down on "US recession fears".

What's next?

During the Microsoft / Yahoo 'headline parade' this past week, others (notably AOL) were making acquisitions. There's a very good chance, that Private Equity is about to move into this market.

I'm betting on more acquisitions in very short order. Most will be complete surprises. Nervous markets or not.

(1) Market caps of some great companies have tanked as have their stock prices.
(2) Private Equity has no place to put their money. T-Bills? They're better off taking some small (or big) chances right now, and they know it. Funds and ETF's have a few investors looking for action. Public companies will be looking hard at acquisitions over the next few days as well.
(3) The world was watching Super Tuesday as evidenced by those commenting on the Twitter / Google map (see previous post) yesterday. No clear direction for America on Super Tuesday (and the primaries could very well be decided right here in Pennsylvania in April!).

The markets are very nervous and could sink further from here. Not a time for the small investor. M & A - You bet.

The week to watch is ahead. As company valuations and stock prices continue to tumble, you can bet there will be a host of acquisition announcements, big and small.

Do I know what I'm talking about? We'll find out :)

The good news. You may be able to say 'fill it up' again soon.

Update: Bloomberg is reporting that TWX is considering spinning off AOL among other options here .

Update 2: is reporting the latest on AOL and the Time-Warner plan here .