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Breakingviews: Forget the tech bubble

Tuesday, May 13, 2014 - 03:07

May 13 - Richard Beales and Rob Cox discuss the resurgence of M&A activity and the rising risks associated with some deals.

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We'll let -- about it news technology stock market bubble. -- could be some other levels around one amendments acquisitions wrote in the activities talked about both wells talked -- editors have look at the the aggregate numbers for -- And and activities so far this year it's kind of astounding sixteen. One point three trillion dollars deals announced globally right which is double what we saw -- -- -- just aggressive from a deals but it's across the board but you have certain big ones that you have TN TC -- this Time Warner Cable Comcast -- you've had what we should have. Tabs on those numbers yet but AT&T DirecTV. And you have farm stuff like Pfizer AstraZeneca valiant game there's tons -- -- what makes it seem like about a couple things one is just the sheer size that we like to go OK that's a lie but on the other -- is the level of risk that some of these that is inherent some of these deals so. When you think of Time Warner. That that is the -- for Time Warner Cable assets by Comcast it's fraught with the -- antitrust -- -- -- -- principles you can sell it it's that -- against. But some others like this AT&T DirecTV things sort of response to that deal obviously right now -- -- -- -- -- reason for doing that of course. So you're you know you but your boards are letting executives speak. Risks they haven't done for years so that the -- of this -- would you think about. But the potential for me in the UK political risk I'm listening okay political risk already knew that's what I'm hearing is there right now speaking to the house. You know basically saying here's what we think this won't be the right won't cut the UK it its science -- -- fetus. At the same time you have the US at least not enough but enough people in congress think. Hold -- with this idea of attacks and this does it. So it's still the risk there. I'm and then you have you have a GE in in France trying to Al -- are deeply. Think it's risky from a completely different perspective that this sort of national -- -- -- wheels as inept people beginning to believe again in revenue synergies between Italy Italy is -- equivalents yes it looks a couple examples there have been 46 or -- deals over billion dollars an -- in the US opens here. Where more than 23 two thirds of the acquires all that -- rise and in many cases that point column. That there's no mathematical reason for the for the shares to prison and historically historically the get -- definitely added it's human tragedy -- I think what we found the numbers. It's about half go up -- down but basically it's next in this case we're seeing an overwhelming deposits at the point is shareholder's right. Executives on to do these things. But at the same time they're taking for granted that they will reach all these synergies that they're so cost -- -- additional. And that they're somehow one plus one is going to equal four. And that's the point is let I don't it's a bubble that's what that's sort of concede but the point is it's time to it to be careful about how much applause we -- Empire builders up there right now. -- -- Will keep on the emanate bubble and we'll have opportunities -- --

Breakingviews: Forget the tech bubble

Tuesday, May 13, 2014 - 03:07

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