The biggest problem now is, market capitalization is just a number on paper as it can't be converted to cash easily. So essentially they are spending cash to get more value on paper.

The only time market cap helps is when they sell their share holdings, or issue new shares. Because what they are doing is to convince people to pay more cash for a share, so that they can sell to them in someway.

Also the price-to-revenue ratio is not a magic number. It's most likely to be implied from the price and revenue rather than a valuation measure. It measures profit margin potential and growth potential. (Very) fundamentally the intrinsic value of a stock is made up of 1) risk-adjusted and growth-adjusted dividend payments and 2) cash-on-the-spot upon liquidation (so called "book value"). Price-to-revenue ratio is far less correlated with these two compared to price-to-earnings ratio or price-to-book ratio.

Acquiring a company: 1) may not help EPS (most likely hurt in the short term), 2) possibly help growth, and 3) may hurt book value. That's why for most acquisitions the acquirer's stock price is likely to fall by a small amount immediately after announcement. The exact market reaction will depend on the synergy of the acquisition, i.e. the strategic benefits in the long run (like reduced competition or cost savings).