Booyah Breakdown: Wall Street Weddings

I love a good wedding, and 2006 was full of some winners.

Tom Cruise and Katie Holmes. Nicole Kidman and Keith Urban. Pamela Anderson and Kid Rock.

Lots of corporate weddings, too, in 2006. Phelps Dodge (PD Quote) said it would buy two major Canadian nickel miners, Inco and Falconbridge, in a $40 billion transaction that would create the largest mining company in North America. (That's the largest announced mining deal on record, according to deal tracker Dealogic.)

AT&T (T Quote) agreed to buy BellSouth for a mere $66.7 billion. And although the deal was not nearly as expensive, Google's (GOOG Quote) $1.65 billion offer to buy YouTube was still a jaw-dropper.

Globally, there were $3.79 trillion worth of deals last year, up 38% from 2005, according to Thomson Financial. But can it continue?

Seems so.

Just this past week alone, US Airways (LCC Quote) jacked up its hostile bid for Delta to about $10 billion. And earlier this month, General Electric (GE Quote) said it will buy Smiths Group, the U.K.'s third-largest aerospace company, for $4.8 billion.

But from the shareholder's point of view, merger and acquisition activity can be confusing. Last week Booyah Breakdown touched on these complications in a reader's M&A question. But you wanted more! Your questions poured in. So let's tackle what happens when you're a guest at one of these corporate weddings.

Do You Even Want to Be Invited?

To start, a merger happens when two companies of equal stature come together to create one large company. These days, that's pretty rare. In most instances, a larger company acquires a smaller one. So when the press says your company is "merging" with another one, you can bet that there's a big company buying a little company, and the little company will soon disappear.