The recent merger announcements from the London Stock Exchange and Toronto Exchange Group (TMX), and Deutsche Börse and NYSE Euronext brought a surge of speculation and potential merger stories to the forefront of business wires.
Who will merge next? Who will offer a competitive bid? I guess it is inevitable but there is something annoying about seeing the business press simply speculating on potential deals once these mergers get in the public consciousness.
For some members of the media a merger announcement gives license to simply speculate on what may or may not be in the works. Surely some of these stories may be floated by people in the know attempted to get a reaction to a potential tie-up or perhaps by a company attempting to push a competitors’ offer price higher but even in those cases where there is an actual source the media should not indulge.
A few months ago it was about CME Group and the Chicago Board Options Exchange (CBOE) after its initial public offering and CBOE and everybody else. I know that there may be some synergies created from such a tie-up and that most equity option exchanges have found a partner but that only means that such stories are unnecessary. I only want to see a story if there is some actual news because I assume the players are exploring their M&A opportunities.
The recent merger announcements may lead to further mergers or they may not. We know they will lead to endless speculation as to who will be next. CME Group put out a release this morning that was obviously a response to rumors and speculation regarding its reaction to the DB/NYSE Euronext announcement.
Perhaps what is most annoying about this indulgence into “who will be next” is that it takes away from more important analysis. Such as is this a good thing? How can we cheerily be talking about financial sector consolidation when we are still licking our wounds from a global economic meltdown brought on, in large part, by “too big to fail,” institutions.
These announcements came out the week before St. Valentines Day and in the spirit we offer a slight adjustment to the famous line, “Love means never having to say you're sorry.” In the financial world, “Size (market cap) means never having to say your sorry (or be accountable).”
We continue to be captivated by big mergers but what it leaves us with — especially at this level — are more too big to fail institutions.