What's the Deal?

The proliferation of takeover and M&A activity has got Wall Street and the whole investment planet in a tizzy. Merger volume is at an unprecedented $2 trillion according to Dealogic (Oh, to be an investment banker right now!). Long held barriers that kept many large companies from takeover are crumbling. Some firms were thought to be too gigantic to swallow and were thus "off limits" to the LBO and other corporate acquisition shops. No more. ANB Ambro, the massive Dutch bank is being offered upwards of $100 million, mostly debt, which used to be unheard of.

Today Alcoa (AA) is making an unsolicited offer for Alcan, Inc. of Cananda. The marriage could create a near aluminum monopoly, something the mighty US government frowns upon. What are the drivers to these mega deals?

1. Equity financing-The stock market remains strong. The Dow is hovering at 13,300. Higher stock prices means more cash and confidence for CEO's to go shopping. Shareholders, flush with returns, give thier blessings for these spending sprees, especially since mergers often add value to a company by saving money through economies of scale.

2. Debt financing-Interest rates are so reasonable right now there are tons of options for agreeable financing for these deals. Banks, hedge funds and other large institutional lenders will provide this kind of financing because the return for Treasury bonds is not so great. Why not lend in this environment? Add to this, despite recent elections, we still have a very friendly Congress and US Justice Dept. These consumer watchdogs are still on the prowl for deals that could hurt the public, but according to former Federal Trade Commission economist, Jonathan Baker, the Bush JD has the lowest instance of merger challenge since the late 80's.

3. Private Equity-Firms like Kohlberg Kravis & Roberts, BlackRock, et al are swimming in a very tax-friendly environment for the financing of these kinds of mega deals. Private Equity gains are currently taxed at a friendly 15% long-term cap gains rate. This could go up to 35% if certain folks on Capitol Hill get thier way. So firms are getting things done pronto before the winds of fortune change.

So look for heavy M&A activity for the time being. To me it feels like the giddy easy money home lending days of 2004-2005 but I won't be an alarmist. Heck, braver folks could try arbitrage trading some of these transactions. Like buying calls on Alcan (the target company) and buying puts on Alcoa (the possible acquirer). Traditionally, if a deal is done the price of the target goes up while the hunter's price goes down. I'm not an advocate of this type of trading but it could be fun to try.

This Alcoa/Alcan deal intrigues me. Fitmarket will be watching this development closely.

Whew! With all that heavy lifting on Wall Street it's a good thing I've included a solid leg routine followed by a tasty power filled menu. Dig in.

Do these at 75%, meaning if you can squat 300lbs 6-8 time safely with good form, use 225 lbs for this workout. Use a spot if you need it. As I continue to beef this blog up I will provide a way to locate a gym and a personal trainer in your area. Till then, let your fingers do the walking ya loafers!

Smith Machine Squats: 3 sets x 10 reps
Calf Raises (seated): 3 x 10
Leg Press: 3 x 10
Romanian Deadlifts: 3 x 10
Standing Calf Raises: 3 x 10

Cardio: 25-30 minutes at 60-75% speed.

Menu:

Breakfast:
Oatmeal, skim milk, 1 scrambled egg, V8 juice

Snack: 1 sliced apple w/ peanut butter

Lunch: Turkey on whole wheat with spinach, carrot sticks, 8 oz skim milk or diet soda.

Snack: 10 Triscuits and a handful of walnuts or almonds

Dinner: Grilled fish, spinach, cucumber, tomato salad, redskin potatoes baked with black pepper and olive oil.

Workout shake: Muscle Milk (you can get good deals at www.bodybuilding.com or grab some at most grocery stores these days. Plus, there's always GNC) or whey protein shake with banana.

That's all for now. Watch those charts, do your homework, and don't forget to stretch!