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Thursday, January 28, 1999 Published at 14:51 GMT

Business: The Company File

Europe's merger prospects

The BBC's Rodney Smith examines the prospects for even more merger mania in Europe thanks to the advent of the euro.

Coming up soon, the euro payoff - the mergers, the buyouts, the takeovers.

It may seem strange to be looking forward to a trend which is already clearly under way. But some euro observers believe we have seen nothing yet, compared with what is to come.

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At present, we are seeing the upper layer mergers, the big players who do not need a currency to understand the advantages of joining forces to gain bigger market share, economies of scale and they promise, better shareholder value.

This upper-echelon movement is more than simply pan-European, of course, it is global. Daimler-Chrysler, BP-Amoco, Vodafone-AirTouch; they are just international companies doing what they do with the world market place.

But what about further down the list. The SME's, the smaller and medium enterprises.

A clearer picture

Now that the euro is displacing national currencies, euro-accounting will become the norm.

At a stroke, companies which once seemed foreign and unfamiliar will become instantly familiar to accountants all over the EU. Balance sheets, sector ratings, even share prices and share multiples, will all become more transparent, more visible - and more accessible.

The Americans are rarely slow to miss a financial trick. Seasoned Wall Street economist and all round guru, Barton Biggs - the man who moved a market when he called an end to Japanese recession at the end of last year - says he is looking for outperformance by Europe.

By that he means shares on EU bourses, and he is taking about the next two or three years at least. And all thanks to the euro, and the business it will generate.

Most of that will be cross-market invasions and mergers and takeovers. Watch the business pages.

Meanwhile, the next pan-European merger? Try Volvo and Fiat. Well, actually not. Volvo opted for Ford. But they can't all be trans-European and Ford does tell us it is an international company these days.

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