Credit crunch, what credit crunch? Yet another monster technology deal has just been unveiled. This week, Hewlett Packard (NYSE: HPQ) announced an agreement to buy networking equipment maker 3com (Nasdaq: COMS) for $2.7bn. Mike Harvey described it in the Times as "the latest in a series of takeovers in the tech sector" that are built on "confidence returning to the market". But I would be wary of piling into HP shares.
First off, despite all the headlines they generate not to mention all the juicy fees for professional advisers plenty of studies have shown that most mergers and acquisitions add little shareholder value. Bad timing is often the problem, as Royal Bank of Scotland's purchase of ABN Amro, or Ferrovial's acquisition of BAA, both just ahead of the credit crunch, demonstrated. And right now global stocks look pretty pricey once again after a huge rally that began in March. Sure, six months ago there were bargains galore, but that hardly looks true now.
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