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Merger mania continues
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February 18, 1997: 9:34 p.m. ET
Corporate combinations running at record pace in dollar terms
From Correspondent Katharine Barrett
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NEW YORK (CNNfn) - Although 1997 isn't even two months old, U.S. companies have already announced more than 1,100 mergers.
That's slightly below last year's record-setting pace in terms of total deals announced, although individual deals are getting larger in dollar terms.
In the latest merger news, Marriott International bought Renaissance Hotel Group for $1 billion, while H.F. Ahmanson & Co. launched a $6 billion unsolicited bid for Great Western Financial Corp.
Tuesday's mother lode of activity pushed the value of 1997's announced deals to more than $100 billion -- 47 percent higher than this time last year.
Analysts say most companies aren't entering mergers just to get bigger.
Instead, moves stem from a search for complementary lines of business, as well as for added sales and improved efficiency.
Lawyer Stephan Haimo of Strook & Strook & Lavan, added that the '90s merger game is a paper chase, with most companies buying others with stock -- not cash.
"There are companies out there who currently have (stock) that is very high valued, and can use their stock to do transactions," he said. "Other companies that aren't able to keep up with the strength of the market are vulnerable to acquisition.
Analysts say the rising bull market and low U.S. interest rates are driving the current craze.
Experts add that deregulation also continues to spark merger activity in the telecommunications, financial-services and utilities sectors.
However, analysts say a slowdown in the stock market could change everything.
Michael Carr, co-head of mergers and acquisitions at Salomon Brothers, added that government officials who are promoting deregulation could slow mergers by eliminating tax advantages that some deals currently enjoy. (471K WAV) or (401K AIFF)
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Salomon Brothers
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