Merger Mania

1995 was a record year for the financial markets in the US. Almost all of the previous records were broken as stocks climbed to an all time high and bonds had returns that made many investors happy. According to some opinions, this spectacular performance of the stock and bond markets triggered the merger mania that captured top executives in almost every single industry. More than 9,000 mergers took place in 1995, amounting to approximately $450 billion. In industries such as telecommunications, media, financial services and high technology, the leading companies came together to form even bigger organizations. The early 1990′s belief that large organizations are inflexible and therefore cannot compete efficiently in the global arena sounded like a theory from a forgotten era. The question of 1995 was “How big do you have to be to dominate your industry?”

Following the trend, many shipping companies around the world entered into mergers at an unprecedented pace. Although the size of the shipping mergers was not similar to that between Disney and Capital Cities-ABC or Chase and Chemical Bank, the mergers still clearly signaled that consolidation is at the top of a shipping company’s agenda.

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