A year ago, just as 1994 was winding down, BUSINESS WEEK exhorted those who failed to catch the fast-moving takeover express to hop aboard for yet another frenzied ride in 1995. And that's exactly what happened. But don't think for a moment things will slow down. The acquisition pace could be even more intense in 1996.

In this low inflation, slow growth economy, companies are finding it hard to increase sales, so they are anxious to buy market share through acquisitions, says E. Michael Metz, an investment strategist at Oppenheimer & Co. The idea is to generate savings "by slashing costs from redundancies," explains Metz. Moreover, foreign companies are eager to do deals now that the dollar appears to have bottomed. Metz accurately forecast the buyout resurgence of 1994 and 1995.

PERFECT PAIR. Banking has been a merger hot spot. But "the merger game isn't over yet," says George Salem, a veteran banking analyst at Gerard Klauer Mattison & Co., a New York securities firm. Salem's top buyout picks: Wachovia Corp., with 489 offices in Georgia and the Carolinas; BankAmerica Corp., the nation's second-largest bank holding company; and NationsBank Corp., the third-largest.

Salem expects Wachovia to merge with SunTrust Banks Inc. Both institutions would benefit greatly, he says, from a merger of equals because they have so much overlap in their business lines and geographic locations. He's also convinced that "a BankAmerica-NationsBank deal is more likely now than, say, six months ago" because of a few recent developments at Bank-America, including the departure of some key executives.

In technology, Apple Computer Inc. and Western Digital Corp. lead the pack as takeover baits. Apple, an oft-rumored takeover target, has become more attractive lately because there is no more takeover premium in the stock price. Apple has dropped to 38, after hitting 50 in June on takeover speculation.

Stuart Shikiar, who heads Shikiar Asset Management, says investors are woefully disappointed in the absence of an Apple deal. But he thinks that either Hewlett-Packard Co. or IBM will eventually gobble up the computer maker sooner rather than later. Other pros believe Sony Corp. and Motorola Inc. are also preparing to bob for Apple.

Drugs were also hot in 1995. Among the new year's bets: Allergan Inc., a global health-care provider that makes specialty therapeutic products for eye and skin care as well as neuromuscular disorders; Alza Corp., which develops and tests, through joint ventures with larger companies, a variety of drug products; and Acuson Corp., which makes medical diagnostic ultrasound imaging systems.

PAC-MAN ATTACK. Boise Cascade Corp., an integrated paper and forest products company, is the pick of paper industry analyst Kazi Hasan of Premier Consulting. He is convinced that Georgia-Pacific Corp. or leveraged-buyout giant Kohlberg Kravis Roberts & Co. will move to acquire Boise. Now trading at 36 a share, Boise is way undervalued, he believes, in part because 80% owned Boise Cascade Office Products Corp. alone is worth 20 a share in Boise stock. The Boise unit, which went public in April, is now trading at 42 a share.

At first glance Brooke Group Ltd. appears to be an unlikely takeover play. But certain arbitrageurs believe that Brooke, whose Liggett Group Inc. division makes such cigarettes as Chesterfield and Lark, may face a Pac-Man attack from RJR Nabisco Holdings Inc. That means that RJR will scoop up Brooke in order to get rid of Brooke's chairman and CEO, Bennett S. Le-

Bow, and financier Carl C. Icahn. The two men jointly own 4.8% of RJR's stock and threaten to wage a proxy fight to unseat RJR's board. RJR spokeswoman Carol J. Makovich says that the company doesn't comment on rumors.

The takeover game is for the brave of heart. But with forecasters cautious about the stock market's prospects in 1996, the smart investor may well consider a portfolio of takeover bets--risky or not.

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