Bloomberg's Matthew Lynn wrote last week that a number of US firms are ripe for takeover at the minute. The theory goes that, with the dollar so low against Sterling / the Euro, and the market caps of many of the US players heading south, now is a good time for a brave European firm to take a punt.

With Bear's market cap currently around $14bn, Lehman's at $30bn, Merrill's at $45bn and Morgan Stanley's at $57bn, Lynn argues that these firms could fall to rivals like HSBC, Banco Santander, Credit Suisse, Deutsche or even Industrial & Commerical Bank of China (ICBC), which has a market capitalization of some $335bn. He feels that Bear and Lehman, in particular, look very affordable.

But we at Here Is The City are not too sure. Let's firstly rule out Morgan Stanley. The firm is recovering well under CEO John Mack, and is unlikely to do any deal where it comes out second best. And any firm that tries a hostile takeover is asking for trouble - Morgan Stanley are experts in beating off predators (usually for clients). And Merrill Lynch ? We don't think so - is anyone that brave ? The firm just has too many issues at present. Bear and Lehman ? These two firms have been tipped for takeover for years, and it's never happened. One of the main reasons is that staff currently hold around 30% of the equity in each firm (and senior management have a substantial part of this) - and turkeys don't usually vote for Christmas. Also, there's the cultural thing. Staff join both Bear and Lehman as they are seen as entrepreneurial firms based on a meritocracy. The thought of voting their stock to go work for the more bureaucratic HSBC or Germanic Deutsche would be quickly dismissed.

And what about the firms tipped as buyers ? Credit Suisse ? Not now, no. CEO Brady Dougan wants a period of calm, not another big merger / takeover. HSBC ? No, this week the bank's strategy is not to be big in investment banking. Deutsche, Santander and ICBC ? Possible, but most unlikely. Would you buy now amid all this market uncertainty ? 

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