High-profile bids such as the one for BAA give the impression that the entire country is for sale. If we will sell Heathrow, what won't we sell?To some extent this is the result of pension regulation, with pension funds here being forced to reduce their equity holdings, whereas funds on the continent are encouraged to increase them. We are particularly aware of M&A activity here in the UK because so many UK companies are on the receiving end of bids. The boom in mergers and acquisitions worldwide - and the parallel boom in IPOs - raises intriguing questions about share values and the state of the global economic cycle.

These include whether the boom in acquisitions means shares are still undervalued? Or this more a function of the excessive liquidity pumped into the system by the central banks? Does the fact that, despite the recovery in activity, we are not in the frenzy of 1999 mean that this economic cycle still has some way to run? And then there is the more parochial question: if there is not much money in the corporate sector why do UK companies invest so little? Some perspective. It had made a further improvement on the 5.4 per cent achieved last year.However, last year's growth was at the expense of margin - the difference between the rate at which it borrows and lends funds.Industry experts say A&L is showing clear signs of improvement in areas such as new mortgages and current accounts and relationships with independent financial advisers who sell its products. Last month, A&L said it would move into the buy-to-let market, backed by the US investment bank Lehman Brothers.. It already holds a 9 per cent stake.A&L welcomed the clarification from Paris, and said it was business as usual.In June, A&L revealed it had won almost double its traditional 3.4 per cent share of new lending in the first three months of the year. Instead, Santander is on the lookout for other types of financial assets in the UK to build a high street bank to take on the likes of Barclays and Royal Bank of Scotland.Santander's chairman, Emilio Botin, is an opportunistic buyer and there are those within the City who still expect him to make a move on A&L, long seen as vulnerable to a bid, if the price is right.James Invine, the UK banks analyst at Merrill Lynch, thinks that when stripped of bid premium A&L shares are worth just 870p each.Meanwhile, Cr?t Agricole, established 12 years ago to provide finance to French farmers, has said it wants to assume full control of the Greek lender Emporiki.

The other lender most often linked with A&L - Banco Santander, the Spanish owner of Abbey - has made it known to major shareholders that it is not interested in another British mortgage bank. He thought that too mean, and is understood to value the mortgage and savings bank's shares at about 1,500p.Two months later, Cr?t Agricole confirmed publicly that it was interested.Any takeover now looks unlikely in the short term. Alliance & Leicester shares fell 65p to 1,084p yesterday - the steepest loss by any constituent of the FTSE 100 - after Cr?t Agricole revealed it was no longer looking into a £6bn bid. France's biggest bank, led by its chief executive, Georges Pauget, failed to uncover sufficient benefits from a tie-up to press ahead. That is understood to have been, in part, a result of the upward march of A&L's shares in recent months that has been underpinned by hopes of a bid.In March, informal soundings about a possible 1,300p-a-share cross-Channel offer were batted away by A&L's chief executive, Richard Pym. Either way, BAE will then have to hold an extraordinary meeting to allow shareholders to vote on the matter, which will take a further 21 days to convene.BAE appears to have abandoned the third option of seeking another buyer for its Airbus stake in an attempt to force up the price which EADS finally pays. Under the shareholder agreement between the two companies, EADS is allowed to match any higher offer BAE might receive.There also remains the possibility of legal action by BAE against EADS or Airbus or both over their failure to notify it of the production problems on the A380, even though EADS's management became aware of them in April - two months before the company's shock profits warning..

It will take four to six weeks, which means BAE's board will not be in a position to decide whether to press ahead with the sale to EADS at the valuation arrived at by Rothschild or hold on to its Airbus stake before the end of August. The warning caused a 25 per cent drop in the value of EADS shares.BAE said it did not believe any "credible or serious" assessment of the impact of the A380 delays could be made so rapidly and wants the audit to establish how bad the problem is and whether Rothschild was correct in its valuation.BAE must give Airbus two weeks' notice of the audit, to be conducted by an independent financial expert appointed by BAE. This will include the prospects for the A380 superjumbo, which has been hit by serious production delays, and the development of the Airbus A350 jet, which is expected to cost twice the initial estimate of €4bn.BAE executives remain furious that a week after the company decided to exercise a put option to sell its stake, EADS warned that production problems on the A380 would delay deliveries of the aircraft by six to seven months, potentially slicing €2bn from EADS's profits over the next four years. This is much less than BAE had expected to receive and less even than the "conservative" valuation of €3.5bn in the accounts of Airbus's majority shareholder, the Franco-German aerospace and defence group EADS. The audit will examine all the information which Rothschild had access to, including Airbus's revised industrial plan, before arriving at its controversial valuation.