It was an astounding year on all fronts, as deal makers grew more aggressive and shareholder activism reached new heights, according to a commentary yesterday in the New York Times DealBook blog. The merger market is on track for a record $4 trillion-plus year. Shareholder activists again dominated and companies ran to do their bidding, but there were troubling signs that the reign of activists was pushing companies into risky strategies, according to the commentary. DuPont and Dow, each a target of activist hedge funds, agreed to combine in a deal where they also immediately agreed to split up into three companies. This risky bit of financial engineering promises $3 billion in savings, but the markets were lukewarm as the stock of both companies rose then quickly fell below the announcement prices. Office Depot and Staples, meanwhile, pushed by the activist hedge fund Starboard Value, agreed to a $6.3 billion combination only to be later sued by the Federal Trade Commission, which sought to block the transaction. Starboard, which orchestrated the move, has fled to the lifeboats, and has sold about half its holdings in Office Depot.
