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You Pay Mad Opportunity Costs of Stock Merger Moves

27 March 2008 - News - Editor

Organic is better for your family meal table. It is the same with stock. Support managers who plan and execute internal growth plans. Think of all the time, cash, and efforts that merger and acquisition moves drain from stock.

All inorganic growth is not bad. Vertical integration can capture net value for stock. It is the same with related diversification. You want Interest Coverage to rise. The bottom line after a merger or an acquisition depends on net strategic benefits.

Buying out a clone is unlikely to help any stock. The sheer costs of getting past regulators take away any reasonable chances of stock benefits. You can see, if you dig, the legal and lobbying fees. Time and executive attention lost in improving customer value, is a different matter. Operations may languish endlessly as warring teams decide on the pains of former competitors working together. Competitors may gain most at the cost of your stock.

XM Satellite Radio Holdings Incorporated (XMSR) has approval from the Justice Department to merge with Sirius Satellite Radio Incorporated (SIRI). It is over to the Federal Communications Commission. So many people have to decide how much choice we should have in the news, music, and other stuff we can access on portable radios.

How do you see this move? Will stock of the merged entity be hugely better than the two separate ones? Both stocks are listed on the same stock exchange. Will NASDAQ gain from this merger? Or is the move solely for the listening pleasures of millions of Americans? Join our forums and voice your opinion.

Tags:

growth, merger, acquisition, communications, nasdaq

 



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