Oligopoly growth in the new year: a few notes
Auto manufacturing
A recnt survey of auto industry execs, European automakers are ripe for more consolidation through mergers and acquisitions in the next few years. According to a Reuters story ("European auto sector ripe for consolidation -- study", 1/1/2004) low profits and cost cuttings pressures are making new deals all but inevitable. This follows in the wake of lackluster performance by some highly touted strategic partnerships between companies.
The likeliest move is that General Motors will assert its option to buy out Italy's Fiat in 2004. GM currently has a 20% stake in the company.
Technology
One pundit sees enterprise-software vendor Siebel as a likely takeover target. With the PeopleSoft takeover of J. D. Edwards, and Oracle's desperate bid to swallow PeopleSoft, the ERP software segment is consolidating fast. Rumor has one of IBM, Microsoft, or SAP countering by buying Siebel, which has been losing market share lately.
In other reports, communications hardware maker Cisco is rumored to be interested in communications software leader Veritas. The two companies are partnering on new technology already. Some say that Texas Instruments may be interested in buying up chip maker AMD, Intel's biggest competitor Both HP and Oracle are said to be interested in infrastructure software company BEA Systems.
Cookies
With Parmalat melting down, it is likely to sell off its US cookie lines, namely Archway and Mother's brands. This constitutes the third largest cookie enterprise in the US, after Nabisco (Altria) and Keebler/Sunshine (Kellogg), though the market share is below 10%. Both Altria and Kellogg, as well as some private equity groups are considering whether to bid on the property, according to the Wall Street Journal.
Hotels
The Le Meridian hotel chain, based in the UK but with luxury hotels worldwide, looks likely to be acquired by a joint effort of Lehman Brothers, the investment banker, and Starwood Hotels. Starwood owns and manages such hotel chains as Sheraton, Westin, The Luxury Collection, St. Regis and W Hotels. The Le Meridian chain is deeply in debt. (Wall Street Journal, 12/30/2003)
Electrical Utilities
If the US Congress manages to agree on a compromise on the Energy Bill, it will probably repeal the Public Utility Holding Company Act, or PUHCA, That will allow companies to increase their portfolio of electrical utilities, and is likely to cause a stampede of mergers and acquisitions. In expectation of that onslaught, buyout specialist Kohlberg, Kravis, Roberts (KKR) has bought out UniSource Energy, an Arizona company. Texas Pacific just agreed to buy an Oregon utility from Enron. Many more such deals are thought to be around the corner.
Telephony
Here the rumors about telco M&As are coming fast and furious. Cingular may well acquire either T-Mobile or AT&T Wireless this year. Sprint, MCI, and AT&T Long Distance are perpetually rumored acquisition targets, with SBC, Verizon, and BellSouth as the likeliest bidders for at least one of them.
Banking
In the wake of the Bank of America/Fleet merger, a number of banking companies are rumored to be acquired next. Takeover targets mentioned by analysts and fund managers were KeyCorp, National City, Comerica, SunTrust, PNC Financial, and U.S. Bancorp.
