"M&A should start picking up now," and some of Philadelphia's biggest companies are priced to sell, say analysts at Credit Suisse.
Comcast Corp., of Philadelphia, and AmerisourceBergen Corp., Wayne, are among 25 U.S. big companies that ought to attract buyers because they enjoy such high cash flow and low debt that a "hypothetical" new owner "should be able to finance a deal" using the target companies' own money, the team of analysts led by Richard Garthwaite wrote in a report to clients last week.
UK drugmaker GlaxoSmithKline, a major local employer, is also takeover bait, by Credit Suisse's measure. So are Dell, Nike, Pepsico, Walt Disney and healthcare stocks like Amgen, Cardinal, Coventry, and Unitedhealth. Separately, Philadelphia oil refiner Sunoco and Pittsburgh-based United States Steel are among 10 industrial companies that should draw buyers, in part because their market prices are below plant "replacement value."
Credit Suisse isn't saying Comcast will sell next week, or ever. It's just looking at financial data, not at "blocking stakes" such as Comcast chief executive Brian Roberts' supersize voting power, which prevents Roberts from selling Comcast until he wants to, no matter how good a deal would be for his investors.
Why are we talking merger at all? Isn't the economy slow, aren't banks reluctant to finance deals? "The worst recession in 70 years" and deep expense cuts has left US companies "setting the stage for a surge in mergers and acquisitions" as they "pile up cash" in a time of low interest rates, writes Bloomberg News, citing the CreditSuisse report, here. Today's $3.9 billion Dell-Perot Systems deal, and Kraft's recent offer for Cadbury, also feed deal speculation.