[img]692|left|||no_popup[/img]Stock prices and retirement funds might be fizzling, but the dating scene is hotter than ever.
These days you can’t switch on your television or cruise the internet without being bombarded with ads for online matching and dating services.
The possibilities seem to be endless. You can find your ideal match by mutual interests, religion, race or odd proclivity.
Unrelated to Finances
If you’re single and on the hunt, or even if you’re not, it’s tough to ignore the buzz.
Even with the worst recession in 70 years, business is booming. The dating fever also seems to have caught fire in the corporate world.
Today, after a brief courtship, Dell, the second largest maker of personal computers, has announced its marriage to Perot Systems Corp. for $3.9 billion. This is Dell’s biggest ever purchase, a sign that the Round Rock, TX, tech manufacturer is ready to go toe-to-toe with I.B.M. and Hewlett-Packard in the computer services business.
Dell’s move to take over the company founded by former presidential candidate H. Ross Perot may also be a preview of the merger and acquisition passion that seems to bubbling on Wall Street.
After the 58 percent growth in the S&P since the 12-year lows in early March, investors appear to have acquired a renewed M & A appetite to fuel growth. In addition to the rapid rebound in stock prices, companies have been piling up cash at a record pace.
With interest rates near zero amid the biggest wave of firings since World War II, companies have been building up their cash reserves. And their shareholders are demanding they start to spend it. According to a recent Commerce Dept. report, aggregate corporate cash reserves may top $1.5 trillion by year’s end.
[img]693|right|||no_popup[/img]Dell is only the latest corporate groom to exchange vows.Earlier this month, in an interspecies wedding between two animated titans, Mickey tied the knot with Spiderman when Disney acquired Marvel Entertainment for $4 billion. The deal, valued at $50 per Marvel share, will give the Mouse access to the stable of more than 5,000 superheroes that the famed comic book publisher has inked over the past 50 years, including Ironman, Captain America and Thor.
Chocolate Courtships
Kraft, the world’s No. 2 food maker behind Nestle, is in the midst of a bidding war for the hand of Cadbury, Europe’s second largest confectioner. The U.K.-based maker of Dairy Milk chocolate and Trident chewing gum spurned Kraft’s initial $16.7 billion bid as “fundamentally inadequate.”
Love hurts.
To thwart Kraft’s attempt to expand its foothold in the sweets business, Nestle is courting Pennsylvania-based Hershey in the hope that it can lure Cadbury with the prospect of a bigger dowry. Other potential suitors for the legendary maker of Flicks, Dentyne and the Crème Egg include Kellogg Inc. and PepisCo, Inc.
When it’s all said and done, the Cadbury nuptials could cost up to $21 billion. This would be a sweet deal for any corporate bride.
Most analysts believe that cash relative to share prices will climb to their highest level in at least two decades next year compared with yields on corporate bonds. The previous high in cash levels in 2005 preceded the two busiest years ever for corporate takeovers. Takeovers in 2006 jumped 32 percent, and stretched an additional 13 percent in 2007.
The shrinking expense profile of many companies in the U.S. and abroad has also made them more attractive especially to buyers who plan to sell bonds for takeovers. While the days of easy credit for billion-dollar deals may have faded, several companies with strong balance sheets are back in the mating game.
If the recent spate of matchmaking is any indicator, the engagement ring business at Tiffany’s and Cartier soon should be blooming.
John Cohn is a senior partner in the Globe West Financial Group, based in West Los Angeles. He may be contacted at www.globewestfinancial.com
