Abitibi-Consolidated Inc. (NYSE:ABY) and Bowater Inc. (NYSE:BOW) are very much alike. Both companies are in the paper business. And, yes, both companies have been dealing with the problems of lagging newspapers and magazines growth.
Well, now these companies are going to merge. The new name? It will be AbitibiBowater.
True, it's a terrible name (I'm really not sure how to pronounce it). Then again, the brand really doesn't matter so much because the companies do not sell to consumers.
However, Wall Street loves the deal. Basically, AbitibiBowater should realize tremendous cost savings. The estimate is about $250 million per year.
Currently, Abitibi's stock price is up 27% and Bowater is up 30%.
However, there could be a hitch -- antitrust complications. But, in light of some of the tough foreign competitors and the difficulties in the print market, U.S. regulators may let the AbitibiBowater deal get done.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
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