Business: More megamergers on the horizon

Alcoa Inc., the world’s leading producer of primary aluminum, in a bid to buy out its largest competitor is facing anti-trust measures by the government. In its effort to acquire Alcan Inc., it must sell off its aerospace holdings, of which it is a major supplier to two of the world’s largest aircraft manufacturers; Boeing Co. and Airbus SAS. The $27 billion hostile takeover bid if accepted would greatly decrease competition, and might negatively affect the economy. In a move that mirrors Microsoft’s recent bid for Yahoo, Thomson Company is bidding $17 billion for Reuters. This is an attempt to put pressure on Bloomberg L.P. for larger shares of the media market. If the merger were to succeed their dominance of the financial information market would be 34%, compared to 33% for Bloomberg. The merging trend mirrors Standard Oil or the Carnegie Steel Company monopolies several decades ago. Companies merge to take on the largest competitors, but in effect they take away the competition in the market. Large corporations and smaller ones usually can coexist, just look at Wal-Mart and the 99 cent stores. Eventually all large corporations are required by the government to split and diversify to maintain the balance in the economy. Source doc Inside Market Data (subscription)

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