Whether it's small "tuck in" acquisitions, large megamergers between industry giants, or even taking significant stakes in another company, the urge to merge remains strong.

We can't always tell the good deals from the bad. While we might get "synergy," we could just as easily get what investing legend Peter Lynch called "de-worse-ification" -- weakening an existing business's core competency by grafting on wildly unrelated subsidiaries.

Breaking down the buildup
We'll take a shortcut to decipher the good deals from the dealbreakers, and see how the 60,000 investors in the Motley Fool CAPS universe rate the companies hooking up. If two highly rated companies seek a better life together, we figure they might also do better down the road. Conversely, if one company is highly rated, and the other low, we might expect one set of investors to come out ahead, since those ratings forecast investor sentiment of future prospects.

Could troubles in the capital markets finally be taking their toll on M&A? While deals won't stop, the loss of easy credit could make stock swaps play a larger role in financing transactions. Here's a handful of some of the recently announced deals, and the CAPS community's ratings for the players involved, on its scale of one to the maximum five stars:


CAPS Rating


CAPS Rating

Deal Price

RARE Hospitality (NASDAQ:RARE)


Darden (NYSE:DRI)


$1.2 billion

First Charter (NASDAQ:FCTR)


Fifth Third Bancorp (NASDAQ:FITB)


$1.1 billion





$85 million

Leap Wireless (NASDAQ:LEAP)


MetroPCS Communications (NYSE:PCS)


$5.5 billion



U.S. Steel (NYSE:X)


$1.1 billion

CAPS ratings courtesy of Motley Fool CAPS; NR = not rated.

Despite the merger slowdown, there's still enough action. In fact, private equity has invested more than $900 billion in mergers and acquisitions over the first six months of the year. According to Dealogic, there have been more than $13.3 trillion worth of deals made since 2004, making this the richest three-year run since the tech boom at the turn of this century.

Getting the information flow
So what do CAPS investors think about these targets and acquirers? Most of these deals are large ones, exceeding $1 billion. The exception is the small Tarari acquisition by chip maker LSI, which adds to the latter firm's stable of security applications for service providers and networks.

The devil is in the micro-details
The biggest deal highlighted this week might also be the most interesting. MetroPCS has proposed a stock swap with Leap Wireless to create a fifth national wireless carrier. While Leap hasn't yet responded, the deal makes a lot of sense, particularly since most analysts have been expecting a merger since Leap went public earlier this year. With similar business models, a combined company could realize cost savings that could give it a greater national presence.

Earlier this year, the top Bull pitch for MetroPCS was penned by darkknights, who noted that growth was the company's main focus:

Growth, Growth and more Growth. Nation's 2 biggest telecom player with over 100 million customers. PCS will take a small bite out of that market share as it expands. Awaiting market launch in the [Los Angeles] area.

MetroPCS' business model attracted cubanstockpicker, leading him to rate it an outperform:

Better coverage plans. reinvesting into product and service in major cities especially NY. Plus, the fact they get their payments made on time every time or your line goes out. They have very little exposure to hold bad debt or place collections.

MetroPCS will stay away from that debt, too, since the deal is all stock. That might be attractive to Leap investors like amolsarva, who thinks the subprime mortgage mess is responsible in part for the wireless carriers' recent underperformance:

Unfairly drubbed for slowing growth during the subprime stuff. Lots of market-driven growth ahead.

A value-added offer
What's your take on these deals? Should investors accept the cash, or take stock in the new company if offered? Only at Motley Fool CAPS is your opinion as valuable as the pros. Tell the CAPS community whether the urge to merge is good to go, or whether it'd be better to fight for independence.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool's disclosure policy is large and contains multitudes.