Wheeling and Dealing

Around the world in 2006, some 29,000 mergers and acquisitions took place with an approximate total of $3.6 trillion changing hands – 10 percent more than in the last record-setting year, 2000.

Germany-based E.ON has made Europe's largest takeover bid – a $66 billion offer for Spanish competitor Endesa. E.ON raised its bid by 40 percent in late September, thereby sending Endesa shareholders "the clear and unmistakeable message" that the company stands behind its offer, as board chairman Wulf Bernotat said in a teleconference at the time.

But the transaction remains unfinished, and national concerns on the part of Spain could eventually deal it a fatal blow. Despite being repeatedly called on the carpet by the EU commission, Spain does not want its energy production placed in foreign hands.

The EU commission recently ordered Madrid to remove regulatory hurdles by Jan. 19 or face legal action -- a call for Europe`s governments to enable free competition on the European energy market.

Deutsche Börse-Euronext deal fails

The same types of national issues have plagued a long-awaited consolidation of European stock exhanges. Deutsche Börse's repeated offers to cooperate with Paris-based Euronext fell on deaf ears, and in the end, the deal was eventually dropped.

The biggest global deal was US-based, with American telecoms giant AT&T buying competitor Bellsouth for $83 billion. But the third-largest merger overall had a European imprint: the $43 billion union of French power concern Suez and Gaz de France.

Drug-firm action: just the beginning?

European concerns were also at the heart of the fourth-largest merger, which saw India's Mittal Group eventually get its hands on Luxemburg-based steel giant Arcelor, after a Russian steel company was used to boost the price. The bidding drew much media coverage, much of it centered on Lakshmi Mittal, the controversial head of the world's largest steel concern. Mittal said in mid-September that the merger had been a success, and that the newly merged company was running smoothly.

In Germany, the fight for Berlin-based pharmaceuticals concern Schering was one of the most watched takeover battles of the year. The story started with family-run drugs firm Merck making a move to take over DAX-listed Schering. Schering put up a fight, only to be eventually bought by Bayer for 17 billion euros ($22 billion). Schering shareholders saw their stock rise 40 percent on the deal.

Further consolidation in the health care and pharmaceuticals industry is expected, experts say. As Bayer management board Chairman Werner Wenning recently told reporters: "It is still a relatively fragmented industry."

Real results

Whether mergers and acquisitions actually meet investor expectations is a question without an easy answer. The future often looks bright immediately after a merger or takeover, according to Joachim Spill, a partner at consulting firm Ernst & Young. But this can often be chalked up to post-deal euphoria.

The real results can only be seen somewhere between one and three years after companies have merged, Spill said. In reality, the market value of half of the companies that were involved in mergers or acquisitions had failed to keep up with the industry index, while 30 to 40 percent had improved on it.

This explains why mergers are occasionally undone: years ago, BMW shed Rover, to the great relief of many shareholders. Analysts have often speculated that Daimler could do the same thing with the ailing US carmaker Chrysler.