from Casey Research:
The deals keep getting bigger…and one of the gravest financial warnings of 2015 keeps growing in relevance.
Last month, legendary investor Carl Icahn publically warned that cheap money is fueling a bubble in dealmaking. Icahn said:
…[W]hat [companies] do with the money is almost perverse. They just go in and buy another company to show analysts on Wall Street that earnings are going up, so their stock will go up and it’s financial engineering at its height.
Icahn is known for buying huge stakes in “broken” companies…taking a seat on the board…and trying to turn the companies around. He knows more than almost anyone about buying companies.
• Last week, we were reminded of Icahn’s warning…
On Thursday, pharmaceutical giant Pfizer (PFE) revealed plans to buy drugmaker Allergan PLC (AGN).
Pfizer is the 12th-largest publicly-traded U.S. company. It’s worth $213 billion. Allergan is another huge drug company. It’s worth $123 billion.
If the deal goes through, it would create the sixth-largest publicly-traded company in the U.S. The new company would dethrone Johnson & Johnson (JNJ) as the world’s largest healthcare company.
Pfizer-Allergan would be biggest deal in a monster year for mergers and acquisitions. On Sunday, Financial Times said 2015 is shaping up to be the biggest year ever for global dealmaking:
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