Can you profit from merger mania?

With low interest rates meaning easy access to money, bidding wars and hostile approaches are becoming routine, says Alex Ferguson – but how long before the tide turns on takeovers?

There's no shortage of firms willing to splash the cash. Deals worth $1.8trn were announced in the first half of 2006, according to research firm Thomson Financial. The full-year volume is estimated to be more than $3.45trn. That's up from nearly $2.8trn last year and promises to beat the record $3.4trn set in 2000 at the height of the dotcom bubble.

Public company bosses seem happy to fork out serious amounts of money in order to further their empire-building ambitions. This year, we've seen AT&T acquire Bell South for $89bn, Eon bid $57bn for Spain's Endesa and Mittal Steel buy Arcelor for $34bn. Meanwhile, private-equity firms are fighting ever harder for acquisitions as they become embroiled in bidding wars and even make hostile approaches, a rare event in this industry.

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