Thursday August 29, 2019
Page A 8 in today's WSJ details one of the worst corporate deals in recent history. Bayer, the company that invented aspirin, aspired to become a global crop science company. And so it bought Monsanto.
Market capitalization is the price per share times the number of shares outstanding. In short what the market believes the company is worth. Now the total market ccap of Bayer is about what it paid for Monsanto. So the entire market value of Monsanto has evaportated. Bayer's share price is down 30$.
Google and ther are numerous youtube articles predicting a merger made in hell.
The predictive social science of socionomics holds that mergers occur at market highs amid positive mood. This is an inclusive form of 'let's get together.' Yet often as not, mergers rarely seem to work out. The WSJ article details
Bank of American and Countrywide Mortgage
Alcatel Lucent
AOL Time Warner
Sprint Nextel
and Chrysler Daimler
Note the car deal finally resulted in Daimler literally giving Chrysler away for free to a hedge fund.
Often as not the corporate cultures do not match and the savings and big profits prove illusory.
A goal of studying accounting is the ability to read and understand such articles and explanation.
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