The New York Post quotes an unnamed source 'with an excellent overview of the Wall Street merger business', who claims that the bad investor reception to the recent Bank of America/Fleet takeover has put off a number of CEOs from doing similar deals.
Bank of America's share price fell 11% in the two days after the announcement of the deal as $13bn was wiped off the market value of the bank. Investors are said to have been concerned that Bank of America had paid too high a price for Fleet. According to the newspaper's source, at least 5 deals have been put on ice, mostly in financial services, as CEOs worry about a possible investor backlash.
In a related story, Bloomberg reports that Bank of Nova Scotia has now abandoned its two year search to find a bank to buy in the US as prices were too expensive. The bank's CEO Peter Godsoe also said that 'we came to the conclusion that we would be very small in a very, very large world. And we're used to being very large in a relatively small world'. The move may prompt other Canadian banks to revisit their US expansion plans.
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