Mergers and Acquisitions Occurring at Record Clip
Mergers and acquisitions (M&As) are a
factor in the imperialist economy further
concentrating social wealth and power in fewer
hands. The media report global takeovers are
proceeding at a record pace. Seventeen of these
deals since 2020 comprise transactions of more
than $20 billion with two of the largest
involving Canadian-based companies.[1] The
largest is Canadian National Railway's
acquisition of Kansas City Southern estimated at
$29 billion. This acquisition concentrates the
productive power of the two railways to become
the largest in North America with operations
throughout the continent. It appears to be
part of the strategic aim of U.S. imperialism of
integrating both Canada and Mexico into U.S.
homeland security and its war economy with a
secure rail transportation corridor. The railway
merger dovetails with President Biden's decision
to cancel the Keystone XL pipeline as more
Alberta oil will now be shipped to the U.S. via
rail cars. Some commentators said this fact
alone pushed up the value of the merger,
resulting in greater potential profits for
owners such as Vanguard from higher stock
valuations for both monopolies involved. It
should be pointed out that global investment
cartels such as Vanguard have ownership stakes
in both these railway monopolies and manipulate
and profit from M&As both as buyer and
seller.
Another significant planned acquisition is
between two Canadian telecommunication
monopolies, Rogers Communications Inc. and Shaw
Communications Inc. The takeover of Shaw is
valued at $26 billion. These two monopolies
already have overlapping ownership and
operations and will become the largest
telecommunications monopoly in Canada, slightly
larger in enterprise value than BCE (Bell) and
Telus, consolidating the control of Big Tech
over the lives of Canadians.
Another merger involving the Canadian economy is
a three-way $12.4 billion deal including
Toronto-based insurer Intact Financial Corp., a
European Danish partner called Tryg A/S, and
British monopoly RSA Insurance Group PLC.
Globally, monopolies launched $1.3 trillion in
M&As in the first three months of 2021.
"This [is] the strongest opening period for deal
making since records began," said Matt Toole,
director of data service Refinitiv in a Globe
and Mail article.[2]
Not only are deals being announced, but global
investment cartels such as hedge funds are
increasing their stock ownership in certain
companies in anticipation of seeing share prices
of those companies soar when the "inevitable"
M&A occurs, which they themselves can
manipulate and push along.
The Necessity for a New Direction for the
Economy
and Democratic Renewal
The article in the Globe and Mail
speculates, "The takeover frenzy is fuelled by
low interest rates, banks' willingness to lend
and soaring stock market valuations." It quotes
investment banker Ian Macdonell saying, "Boards
[of companies] realize the competitive landscape
is changing and it's harder to be a regional
player, in North America or globally, so if they
can't be consolidators, they are sellers.
Takeover activity will continue until the credit
market tightens, the economic outlook weakens or
we get a significant stock market correction."
 The Communist
Party of Canada (Marxist-Leninist) believes the
Globe's speculation is disinformation to
confuse the root cause of imperialist
globalization where the rich become richer not
only with M&As but through the war economy
and domination of other countries and the global
plunder of the value working people produce. The
constant wars and increasing autocratic control
of the global economy in the hands of an
oligarchy underscore the necessity for a new
direction for the economy and democratic renewal
to form an anti-war government.
The M&A frenzy within the concrete
conditions of the economy does not arise from
"low interest rates, banks' willingness to lend
and soaring stock market valuations." Such an
analysis fails to explore the aim of the
oligarchs in control and what is driving them to
engage in such practices, and the consistent
trend under imperialism towards concentration of
social wealth and power in fewer hands as the
rich fatten themselves on the wealth created by
others.
The Globe's disinformation suggests that
banks and their "willingness to lend" to finance
M&As are somehow independent from the "low
interest rates and soaring stock market
valuations" and the M&As themselves. That is
not the case. The banks and other financial
institutions profit enormously through fat fees
from organizing and arranging the deals and in
other aspects of M&As.
The Globe's
analysis describes various features of the
imperialist economy but fails to analyze why
these things occur. M&As arise out of the
imperialist economy, as part of its parasitism
and decay, to find maximum profit through the
exchange and seizure of already produced value
without going through any new production process
and circulation of social product. Larger
companies take over smaller or willing ones or
force them into bankruptcy while the oligarchy
roams the world for targets and wealth to
pillage through bullying and war.
The ongoing imperialist tendency is to
concentrate social wealth and economic and
political power in fewer hands and to wage war
for control and profit. These features are
constant regardless of whether the "banks are
willing to lend" or not. In fact, the banks and
other financial institutions such as hedge funds
are fully involved and integrated into the
entire imperialist process as lenders, buyers,
sellers, owners, organizers and war profiteers.
The entire process reflects the reality that
nation-building is a feature of the past and
that imperialist globalization, the politics of
neo-liberalism, a war economy and
nation-wrecking have seized control. If you
delve deeply into the largest M&As, you will
find that most of the private interests involved
are one and the same or at least have the same
aim and interest in seeing the M&A
completed, or, if forced upon them, to emerge
with the best possible terms. As said, the same
private interests are often represented as
lenders, buyers, sellers, owners, organizers and
profiteers.
M&As form part of what the oligarchs call
"unlocking shareholder value and shareholder
value creation" and as such serve their
fundamental aim to make maximum private profit
in the fastest possible time. They have nothing
to do with building a peaceful stable economy
that serves the people, meets their needs and
claims, and can be mobilized to humanize the
social and natural environment. They are part of
the global competition and constant wars for
hegemony to become dominant in wealth and
political power.
 The drive to
seize social wealth and power leads the
competing oligarchs to enrol both public and
private military might to achieve their aims to
seize productive forces, markets, regions, and
workers to exploit and to block or destroy any
and all competitors or those who resist. The
entire aim and practice of the oligarchs is
contrary to the demand of humanity to live in
peace and have economies that serve the people
within a spirit of mutual benefit and
development under their control.
A feature of the concentration of wealth and
power in fewer hands is the continuous expansion
of the proletariat as the largest social class.
A consciousness develops that the economy is
already socialized and in antagonistic
contradiction with the private and autocratic
control of the ruling oligarchy. The necessity
for the actual producers to gain control over
the already socialized economy, productive
forces and social product becomes a rallying cry
for change to bring the aim, control and
direction of the economy into conformity with
its already socialized character for the
betterment of all humanity and Mother Earth.
Notes
1. List
of
largest mergers and acquisitions. The
graph shows the largest M&As from 1879 to
today. It highlights the expansion of U.S.
imperialism, as most of the largest M&As
during the twentieth century involve U.S.
monopolies. The graph also shows the
acceleration of the concentration of social
wealth in the twenty-first century.
2. Globe
and
Mail article by Andrew Willis: "Mergers
and acquisitions activity has exploded. Here's
why -- and the reasons it will continue for
the foreseeable future."
This article was published in
Volume 51 Number 6 - June 6, 2021
Article Link:
https://cpcml.ca/Tmlm2021/Articles/M510067.HTM
Website: www.cpcml.ca
Email: editor@cpcml.ca
|
