Has there ever been a sexier time to invest in U.S. stocks? Lately, headlines have been dominated by the equitable menage-a-quatre among NYSE Euronext (NYSE: NYX) and its suitors: Nasdaq OMX (Nasdaq: NDAQ) and Intercontinental Exchange (NYSE: ICE), competing for its attentions against debonair Euro-paramour Deutsche Borse.

But stock exchanges aren't the only target of Europe's ardor these days. Just this morning, the mundane manufacturing sector heated up when France's Schneider Electric announced it is considering placing a bid to acquire American rival Tyco International (NYSE: TYC). Its name notwithstanding, reports indicate that Schneider is largely interested in Tyco's security products and fire detection units -- businesses in which Schneider is seen to be expanding of late.

Analysts warn that the rumored acquisition is still in early stages, and like Deutsche's attempt to purchase NYSE, could be derailed in the event the suitor bids too low. 21 times earnings is said to be the starting point for negotiations on Tyco (call it $65 a share, or about 32% above today's share price). Anything less could prompt rival bids from Tyco competitors United Technologies (NYSE: UTX), Siemens (NYSE: SI), or Honeywell (NYSE: HON).

And you know what? Wall Street just might be right. Tyco today makes a tempting target at 17 times trailing earnings. That seems a bargain relative to the 18 times multiple at UTX, the 20 times earnings that Siemens shares fetch, and it's certainly cheaper than the 23 P/E at Honeywell. When you consider that Tyco's estimated growth rate is reasonably close to what analysts expect of UTX and Honeywell, I could see either of these companies, at least, jumping at the chance to eliminate a competitor at a reasonable price rather than let it fall into the hands of a European rival.

And for those who argue that Tyco's 13% growth rate is too slow to justify a 21 times earnings acquisition price? I agree in principle, but would suggest you examine the company's cash flow statement before jumping to conclusions. Fact is, with $1.8 billion in trailing free cash flow, Tyco is at least 20% more profitable on a cash basis than its GAAP numbers let on. Sweeten the deal with a 2.3% dividend, and Tyco looks to me like a good bargain if the Schneider deal never happens -- and a great bargain if the rumors are right, and the stock's about to zoom 30%.

How will this supposed acquisition play out? Keep close watch. Add Tyco to your Watchlist today.

Rich Smith has no position in any stocks named above. NYSE Euronext is a Motley Fool Rule Breakers recommendation and The Fool owns shares of Nasdaq OMX Group. The Motley Fool has a disclosure policy.

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