The Interactive Age: The Acquisition of TCI --- Rising Tide: Higher Stock Prices Are Feeding a Revival Of Merger Activity --- After a Four-Year Drought, Volume Hits $225 Billion; Wall Street Is in a Frenzy --- Telling `Stories' to Investors
The merger bandwagon is rolling again.</br></br>With yesterday's announcement of a planned acquisition of Tele-Communications Inc. by Bell Atlantic Corp., takeover fever on Wall Street is suddenly rivaling the wave of buyouts in the late 1980s.</br></br>Spurred by high stock prices and rapid change in a few headline-grabbing industries, this year's merger activity is more than double the pace in 1992, near the bottom of a three-year merger drought. And the volume of $226.9 billion in announced U.S. deals so far this year is only 12% less than the record set in the like 1988 period, according to Securities Data Co.</br></br>But unlike many of the biggest buyouts of the 1980s, which were financed with towering amounts of junk-bond debt, this latest boom is being funded largely with stock whose value has been swollen by a three-year bull market. That equity financing should leave the corporate acquirers less vulnerable to the kind of financial collapse that struck many earlier buyouts that were overwhelmed by interest bills.</br></br>Yet the amount of stock being issued is no less towering. Bell Atlantic's shares, for example, had a stock-market value of about $26 billion when the market closed Tuesday. Yesterday, it disclosed that to finance the TCI acquisition, it could eventually issue more than $20 billion of stock.