This is one of those days in the markets when you can’t tell the players without a scorecard.
* Bank of America buys FleetBoston for $47 Billion, in a deal which might result in you receiving more financially oriented junk mail. If you honestly believe this deal will pass regulatory scrutiny and come to pass, you stand to make about $5 per share by buying now, at about $39.50 per share, and waiting until the deal finally closes to be paid $45 worth of B of A stock. This spread indicates that the experts do not think it will come to pass, at least not in a timely manner: they could make more money elsewhere.
* Anthem is buying WellPoint for a mere $16 Billion and creating the nation’s largest HMO and covering 26 million people. Oh yeah, and Anthem was able to make a cool profit of $196 Million last quarter. WellPoint announced $176 Million in earnings last quarter. This represents overcharged customers. If you think this will make healthcare cheaper or bring medical care to underserved areas, I have a bridge in New York City I’d like to sell you.
* Not enough medical mergers you say? Then how about United Health buying Mid-Atlantic Medical for $3 Billion? Oh yeah, and United Health reported $476 Million in earnings in just 3 months — almost a half billion dollars. Hurry up, I may not be able to hold that bridge any longer without your deposit.
* For you tech lovers, don’t forget Symantec buying ON Technology for $100 Million in cool cash. Nothing brings security to a nearly monopolistic operating system like a nearly monopolistic computer security vendor. I do not begrudge Symantec their $83 Million profit; nobody is striking or mounting political campaigns on the high cost of computer security software.
* Finally, for that international flair, InterActive would like to buy the French company Anyway.com for a mere $62 Million. And here I had been told the French were very must against Anglicized names.
These are, of course, just the big deals. The ones that people are paying attention to. If it weren’t for these, you might hear about one or two smaller deals that simply aren’t perceived as being that important.
Mergers, like many other things on Wall Street, make a lot of money for some people — mostly bankers and lawyers — on Wall Street. But they are not always good, and even when they are good, they are not good for everyone. MCI-Worldcom, Cendant, Travellers-Citibank, and AOL-TimeWarner come to mind.
This is a game you don’t want to play without an exit plan.