Don't Be Nice, Kick Her Twice
What shareholders would be the the mood for any deals in this environment? Really, it is damn ugly out there. No surprise then that Bank of America shareholders are about as interested in acquiring Merrill Lynch as a kick in the taco. Actually, though said kick has lingering effects, these are still smaller than the Merrill Lynch acquisition would be, meaning that a kick in the taco would be preferable to the Merrill Lynch acquisition. (At least according to a draft of the full page Wall Street Journal ad before the editing committee got a hold of it. Kicking is too mean to put in the Journal, it seems).
There is a sort of self-fulfilling prophecy aspect to this whole thing. Acquiring shareholders grow upset over the widening spread between current share price of the target and original offer. Shareholder approval looks less likely. Arbitrage players press spread wider, acquiring shareholders get even more upset over the widening spread between current share price of the target... etc. etc. etc.
I wonder what our government's financial supermen and superwomen will do if that deal begins to crumble too. Backstop funding perhaps? That seems to be the most popular arrow in the quiver these days.
Merrill Flinch [New York Post]