Muddling Mergers

Mergers are in the news. Delta and Northwest are getting together. Circuit City wants to buy Blockbuster. And Microsoft is courting Yahoo. What do all these mergers have in common? Formerly great companies are trying to combine operations to save costs. But if the top line doesn’t grow, the combination isn’t likely to add any value.

Consider today’s airline merger. It wasn’t so long ago that these giants were in Chapter 11. Now, they hope that by bringing their computer systems together they’ll save some money. Good luck. Or the retail-rental ensemble: Years ago Circuit City was one of the great companies out there. Now the other retailers are eating its lunch.

Studies show that only about half the mergers out there work. Unless the combination finds a way put new breath into its product, the combined company is likely to be uninspired.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-03T18:11:20+00:00 April 16th, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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