WHERE ARE THE AMERICANS? United Kingdom companies, once the special targets of America's acquisition-minded executives, who believed they spoke the same language as the Brits and whose wives hankered after frequent visits to Harrod's, are falling to acquirers almost every day--but American firms aren't participating in the buying spree. It seems that acquirers from Asia to Europe are bidding furiously for any British company with reasonable prospects. Spain's Banco Santander snaps up Abbey and Ferrovial stalks BAA; Germany's Linde will swallow BOC unless the competition authorities object; Japan's Toshiba acquires Westinghouse and Nippon Glass picks off venerable Pilkington. But the Americans are sitting on their hands or, more precisely, their cash piles.

The merger wave is now at levels not seen since the boom of 1999 to 2000. The value of announced merger and acquisition deals involving euro area companies has been running at about $10 billion per day, and all global deals about $20 billion per day. Executives once reluctant to get involved in hostile takeover bids are shedding their inhibitions and joining the bidding wars. Companies that once contentedly cultivated their local and national markets are joining the rush to globalize their operations and tap new markets. This newest merger wave is washing across Europe and U.K. companies among the leading targets.

It's not too difficult to see what makes U.K. targets so enticing. British companies have attractively high levels of profitability. The return on equity for British businesses is running at around 19 percent. Compare that with 11 percent in Germany, and 16 percent in both France and the euro area as a whole (excluding the German laggard). As a result of their higher profits, British companies are throwing off cash flows that are mouth-wateringly attractive to potential acquirers. The premiums they are paying have shareholders cheering.

But Americans are staying on the sidelines, which requires a bit of explaining. For one thing, many American companies already have substantial assets in the United Kingdom; so in a sense, the rest of the world is playing catch-up with the Americans.

More important is the internal dynamic operating in America's board rooms. Like their U.K. counterparts, America's companies are awash in cash. In the past, this was an invitation to acquire other companies, often with disastrous results. Corporate chiefs, flush with cash, had a choice: return the money to the shareholders who own the company, or use it to expand their empires. Empire maximization topped profit maximization on their list of priorities.

Not anymore. American companies are in the process of what is called deleveraging--the paying down of outstanding debt. They are also using their cash to buy back their own shares, which increases earnings per share by reducing the number of shares over which earnings have to be spread. Both the deleveraging and the share-buybacks keep share prices high, which CEOs now are eager to do.

They are getting the message that failure to maintain the value of their shares can mean premature, unwelcome retirement, and on less generous terms than in the good old days before shareholder activists, as they are known, began to raise a fuss about the levels of golden goodbyes, especially in the case of executives who had failed to deliver value to shareholders.